The DJIA fell nearly 300 points (0.59%) to 49,351 on Thursday, while the S&P 500 dropped 0.3% and the Nasdaq Composite eased 0.2%. The DJIA remains above its 50-day EMA near 48,944 but below earlier-month highs above 50,500.
FOMC minutes from the January 27-28 meeting showed “almost all” participants supported holding rates at 3.50%-3.75%, with Stephen Miran and Christopher Waller dissenting for a 25-basis-point cut. Initial Jobless Claims were 206K for the week ending 14 February, down 23K versus the prior week and below the 225K consensus, while continuing claims rose to 1.869 million.
Key Data And Fed Path
CME FedWatch puts the chance of no change on 18 March at about 94%, with the first fully priced-in cut not expected until mid-2026. On Friday, the BEA releases Q4 2025 GDP and December PCE together, with GDP seen at 2.8% versus 4.4% in Q3 and core PCE flagged near 3.05%, alongside flash February PMI after January manufacturing PMI of 52.4.
Walmart posted adjusted EPS of $0.74 on $190.7 billion revenue, with US comparable sales up 4.6% excluding fuel and global e-commerce up 24%, but guided FY EPS to $2.75-$2.85 versus $2.96 expected and announced a $30 billion buyback. Blue Owl fell over 8% after restricting OBDC II redemptions and selling $1.4 billion in loans at 99.7% of par, with Blackstone down about 6% and Apollo about 5%.
WTI rose about 2% to above $66 and Brent reached $71.49, with the Strait of Hormuz linked to roughly 20% of global oil consumption, while spot gold climbed to about $5,012 after regaining $5,000. Deere jumped over 7% on $9.61 billion net sales (+13% year-on-year), EPS of $2.42, and a raised net income outlook of $4.5-$5.0 billion from $4.0-$4.75 billion.
With the market pulling back from recent highs, immediate attention should be on tomorrow’s critical data releases for Q4 2025 GDP and the December PCE inflation report. A hot inflation number could validate the hawkish sentiment we saw in the January Fed meeting minutes, likely triggering significant market volatility. We should consider buying protection, like VIX call options or puts on major indices, to hedge against a sharp downside move.
Rates Markets And Positioning
The Fed’s higher-for-longer stance, reinforced by plunging jobless claims, has effectively removed a March rate cut from the table. Interest rate futures now point to the first cut being delayed until the middle of this year, a major shift from what we expected a few months ago. This environment makes us cautious on rate-sensitive growth stocks and suggests opportunities in shorting treasury futures to capitalize on stubbornly high yields.
The escalating standoff with Iran is adding a significant risk premium to energy markets, pushing crude oil to its highest level in months. This geopolitical tension directly fuels inflation concerns and supports safe-haven assets like gold, which has just reclaimed the $5,000 level. We see this as a clear signal to maintain or add to long positions in oil futures and energy sector ETFs, while using gold as a portfolio hedge.
We are seeing a clear divergence among sectors that presents distinct trading opportunities. The ongoing weakness in software stocks like Salesforce, driven by AI disruption fears, makes them attractive candidates for bearish put spreads. In contrast, Deere’s powerful earnings and upgraded forecast suggest cyclicals may be finding a bottom, making call options on industrial leaders a compelling bullish play.
The sharp drop in alternative asset managers like Blue Owl and Blackstone is a warning sign about liquidity risks in the private credit space. The move to restrict investor redemptions has spooked the market, echoing the regional banking fears we saw back in 2023 when liquidity concerns spread rapidly. For now, we are avoiding this sector entirely and watching for any signs of contagion in the broader financial system.
