VIDEO: Where to Focus as S&P 500 Faces Key Level

In today’s Daily Rundown video, Chris Versace discusses what the Portfolio will be focusing on in the week ahead as the S&P 500 sits on a key technical support level.

From potential tariffs to important February economic data and a hyperscaler offering that could break open the IPO market, Chris also shares what could move the markets this week. Should Trump tariffs on China, Mexico and China proceed, he details what we’ll be focusing on later this week to gauge company reactions and insights. 

Transcript

CHRIS VERSACE: Hey, everyone. Chris Versace here. Monday, March 3. A new month begins, and we march toward the end of the current quarter. As Bob and I discussed last week in our joint video, March, not necessarily a very seasonally strong month for the markets. And we're entering with the S&P 500 kind of hanging on to its 100-day moving average-- constructive, but at the same time, we have a lot coming this week that we're going to want to pay attention to because it could determine the next big move in the market.

So what are we talking about? Well, we've got the start of potential Trump tariffs tomorrow, and we are once again hearing about reciprocal tariffs from China-- tempting, again, market on the 100-day moving average, but we will want to be careful, especially as this market increasingly appears like it could be more of a trading market than, let's say, a medium to long-term investing market.

So in addition to having to pay close attention once again this week to what happens out of Washington as we get ready for the week ahead, we've got a lot to focus on. So let's break it down piece by piece. First and foremost, we are going to have another wave of retailer earnings-- Nordstrom's, Macy's, Best Buy, and a rash of others. We'll be focused on their comments about the consumer, but also what they have to say about those tariffs should they go into effect tomorrow.

So we're going to pay close attention to what they say really more so about their outlook and the impact of tariffs on margins on their supply chains. With that in mind though, too, we also have to realize that we have quarterly results this week from Costco. They have continued to win consumer market share. Not a surprise, especially given a lot of the February inflation comments we've heard from various consumer surveys.

I think they're going to continue to benefit, but we will want to hear what they have to say as well about tariffs, supply chains, and moves that they have made in advance to reduce the potential impact. Also this week, we have quarterly results from Marvell, and we'll have a preview note out ahead of that. But as we tie the combination of company comments and tariffs, it also means we're going to want to pay close attention to a big investor conference this week.

We talked a little bit about it in last week's comments and in the Friday roundup, but I'm referring to Morgan Stanley's TMT Conference this week. We're going to have presentations from Axon, Microsoft, Google, Mastercard, and Nvidia. So we're going to get a lot of fresh information. We're going to be piecing it together, puzzling it through, as I like to say. And it can be rather timely, too, given when Marvell reports midweek. So we'll have a lot of thoughts on that as well.

The other thing that we'll be watching as it relates to AI and data center is a potential IPO pricing from AI hyperscaler CoreWeave. Now, it's a hotly awaited IPO. There are other reasons to listen for it, obviously to see if this kind of kicks open the IPO market, reinvigorating it. We will, of course, be paying close attention on that front for Morgan Stanley, Bank of America.

But as it relates specifically to Nvidia and Microsoft, Nvidia is an investor in CoreWeave, so to the extent that the IPO goes extremely well, demand is hot and the stock pops, that will be a positive indirectly, I would argue, for Nvidia. But we also want to pay very close attention to what CoreWeave has to say about its outlook. I say this because Microsoft is a major customer of CoreWeave.

So a lot of things coming out of that IPO offering and the subsequent comments. We will, of course, be digging into those. But this week as well, we also have a sea of economic data that could reinforce last week's update for the Atlanta Fed GDPNow model that dipped into negative territory, i.e. a negative 1.5% was the update on Friday, a big reversal from the 2.1%, 2.3% GDP figure for the current quarter that it had been showing.

When we mine this data, we'll be keeping that in mind. But we'll also be looking to see, does it push back on that model? Is the economy a little stronger than what that update had to say? Because remember, it is a rolling GDP forecast. But at the same time, does this week's economic data show more concern about the potential impact of tariffs?

We will start to get those answers later today, starting with the back-to-back February PMIs on manufacturing from S&P Global and ISM. Remember the flash PMI in manufacturing turned up. The question that we'll be looking to answer is, is this a pull forward in demand or the start of something a little more pronounced? But I would argue, candidly, that we will be paying attention to that data, but the greater importance for us is going to be the February final services PMI that we'll get from ISM and from S&P Global.

The simple why behind this is that when we look at the construction of GDP, the services sector accounts for about 80% to 85%. So if we see a repeat from the flash PMI data for February that the services sector moved into contraction mode, that is going to really bother the market. If, on the other hand, the data, particularly from ISM, shows that the service sector is continuing to hum, I think the market will feel a little relieved. And, of course, we'll see an upward revision in that Atlanta Fed GDP now model.

So it's going to be a very important set of reports to watch. But remember, too, we also have other employment data coming this week-- ADP's employment change report and, of course, the February employment report. There is some concern about layoffs that were announced during the month of February, but also the impact of federal job cuts and DOGE. We'll start to get the early pieces on that with these February final PMI reports out today and midweek. That's going to set the tone for us, along with the ADP Employment Report for Friday's employment report.

So a lot of moving pieces that are coming our way. Remember, too, that we're going to want to see what is all the new order data have to say for the month of February in terms of its vector and velocity, the overall economy, but also, too, what are we seeing on the inflation front? Are we seeing the follow-through from those February consumer inflation expectations.

So we've got a lot going on. And we are going to, of course, assemble all these puzzle pieces as we get the data. And we will be sharing our thoughts with you on what it means for the economy, the market, and, of course, the portfolio. The key for us, as we start the week off, is that we are going to look for greater visibility to see if the S&P 500 sitting at the 100-day moving average is likely to stay there, if that is a potential bottom for the market. And that means we should contemplate putting some capital to work.

If, on the other hand, we see renewed uncertainty, we'll want to watch that level for the S&P 500 very carefully, because the next stop is the potential 200-day moving average, and that is a good deal lower. So we'll want to pick our spots, be prudent, be careful, and let the data talk to us. So folks, please be sure to check your emails, your alerts. If we make any moves with the portfolio, we want you right there with us. Thanks for watching.