Stocks Lower into Final Hour on Escalating US/Iran War Fears, Earnings Outlook Jitters, Technical Selling, Financial/Airline Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 52.1 +1.0%
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .19 unch.
• BofA Global Financial Stress Indicator -.12 -4.0 basis points
• European Financial Sector CDS Index 54.8 +1.8%
• Emerging Market CDS Index 129.1 +1.5%
• Bloomberg Global Trade Policy Uncertainty Index 1.4 unch.

• Citi US Economic Surprise Index 43.4 +7.0 points

• Citi Eurozone Economic Surprise Index 26.0 -.3 point

• Citi Emerging Markets Economic Surprise Index 31.1 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(416 of 500 reporting) +12.3% +.1 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 319.49 +.24:  Growth Rate +18.7% +.1 percentage point, P/E 21.4 -.2
• S&P 500 Current Year Estimated Profit Margin 12.48% +8.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +19.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 505.67 +.44: Growth Rate +23.1% +.1 percentage point, P/E 28.4 -.2
• Bloomberg US Financial Conditions Index .62 +6.0 basis points
• US Yield Curve 60.5 basis points (2s/10s) -1.75 basis points 
• Bloomberg Industrial Metal Index 166.9 -.7% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 30.5% -.8 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +3.0% -60.0 basis points
• US 10-Year T-Note Yield 4.08% -1.0 basis point
• 1-Year TIPS Spread 3.50 +6.0 basis points

• Highest target rate probability for April 29th FOMC meeting: 78.5% (+3.1 percentage points) chance of 3.5%-3.75%. Highest target rate probability for June 17th meeting: 51.5%(+1.5 percentage points) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -520 open in Japan 
• China A50 Futures: Indicating +51 open in China

• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Higher: On gains in my biotech/industrial sector longs, index hedges and emerging market shorts
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.6%

Sector Underperformers:

• 1) Airlines -4.1% 2) Computer Services -2.5% 3) Gambling -2.2%

Stocks Falling on Unusual Volume: 

• BNL, BXSL, ARCC, FSK, MMYT, WING, MAIN, TSLX, CPA, MSGS, OTF, LBTYA, CVI, LMND, WES, LBTYK, ALGM, APO, BX, HCKT, YETI, GTX, MDGL, BKNG, OWL, FVRR, HLNE, BKD, TPG, LOPE, CVNA, VC, POOL, TCMD, W, MD, CORT, JACK, EPAM, CAR and KLAR

Stocks With Unusual Put Option Activity:

• 1) PBF 2) CORT 3) KLAR 4) BTDR 5) AKAM

Stocks With Most Negative News Mentions:

• 1) EPAM 2) KLAR 3) CAR 4) MD 5) OWL

Sector ETFs With Most Negative Money Flow:

• 1) XBI 2) SMH 3) GDXJ 4) ARKK 5) GDX

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value -.2%

Sector Outperformers:

• 1) Computer Hardware +2.4% 2) Defense +1.8% 3) Ag +1.7%

Stocks Rising on Unusual Volume:

• RELY, FJET, HLF, LPTH, BAND, NP, NICE, ULS, OMC, COLD, DE, ETSY, AVTX, OII, TPL, OXY, FIG, KOD, UPBD, WH, TS, AG, SMCI, SSRM, PWR, KTOS, IDYA, VERX, KRMN, VIST, GOOD, INSM, RCAT, TEM, STOK, ATEX, NBIS, ESI, FLR, COKE, SII, XP, ECO, MTDR, EBAY, XPRO, SO, HSHP, INMD, DEC, FELE, AMN, CF, LFUS, SNDK, FSM, MAC, LINC, VET, CNH, PVLA, ATI and DASH

Stocks With Unusual Call Option Activity:

• 1) FF 2) GSK 3) PBR/A 4) GLBE 5) BBWI 

Stocks With Most Positive News Mentions:

• 1) DE 2) HLF 3) CDNL 4) NICE 5) OMC

Sector ETFs With Most Positive Money Flow:

• 1) PBPH 2) PBOG 3) EUAD 4) PBEU 5) IGV

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (CCOI)/-1.03
• (LAMR)/2.19
• (PPL)/.41
• (TDS)/.08
• (WBD)/-.03 

After the Close: 

• None of note

Economic Release 

8:30 am EST

• Personal Income for Dec. is estimated to rise +.3% versus a +.3% gain in Nov.
• Personal Spending for Dec. is estimated to rise +.3% versus a +.5% gain in Nov.
• The Core PCE Price Index MoM for Dec. is estimated to rise +.3% versus a +.2% gain in Nov.
• 4Q GDP Annualized QoQ is estimated to rise +2.8% versus a +4.4% gain in 3Q.
• 4Q Personal Consumption is estimated to rise +2.5% versus a +3.5% gain in 3Q.
• 4Q GDP Price Index is estimated to rise +2.8% versus a +3.8% gain in 3Q. 

9:45 am EST

• S&P Global US Manufacturing PMI for Feb. is estimated to fall to 52.3 versus 52.4 in Jan.
• S&P Global US Services PMI for Feb. is estimated to rise to 53.0 versus 52.7 in Jan.
• S&P Global US Composite PMI for Feb. is estimated at 53.0 versus 53.0 in Jan. 

10:00 am EST

• New Home Sales for Nov. and Dec.
• Univ. of Mich. Consumer Confidence Final readings for Feb. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Supreme Court Opinion Day and the (EXAS) shareholders meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -4.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.4 -2.2
• 7 Sectors Declining, 4 Sectors Rising
• 35.8% of Issues Advancing, 61.7% Declining 
• TRIN/Arms .73 -18.9%
• Non-Block Money Flow -$234.9M
  
• 111 New 52-Week Highs, 32 New Lows
• 68.0% (-1.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.2 -5.1

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 26.0% unch.
• How long will the DHS shutdown last? 30+ days 57.0% +9.0 percentage points
• Will China invade Taiwan by end of 2026? 11.0% -1.0 percentage point
• US strikes Iran by March 15th 48.0% -7.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 100.5 -.4%
• US High-Yield Tech Sector OAS Index 508.75 -7.25 basis points
• Bloomberg Cyclicals/Defensives Index 250.8 -.6%
• Morgan Stanley Growth vs Value Index 135.4 -.2%
• CNN Fear & Greed Index 37.0 (FEAR) -5.0
• 1-Day Vix 16.3 +11.7%
  
• Vix 20.8 +6.1%
  
• Total Put/Call .90 -1.1%

Thursday Watch

Night Trading 

• Asian equity indices are +.25% to +1.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 67.0 unch.
• China Sovereign CDS 43.75 -.5 basis point.
• China Iron Ore Spot 95.4 USD/Metric Tonne -.4%. 
• Gold 4,990.4 USD/t oz. -.4%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.93 -.16%.
• Bloomberg Emerging Markets Currency Index 36.2 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 101.2 +.3%.
• US 10-Year Yield 4.09% +1.0 basis point.
• Japan 30-Year Yield 3.38% -2.0 basis points. 
• Volatility Index(VIX) futures 20.1 -.1%.
• Euro Stoxx 50 futures -.07%. 
• S&P 500 futures +.08%.
• NASDAQ 100 futures +.12%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by consumer and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.