The first week of March will bring investors a crucial jobs report and a range of key retail earnings that could have the potential to either stoke or allay fears about the US economy and the consumer showing some signs of stress.
The February jobs report out Friday is expected to show hiring rose modestly last month while the unemployment rate held steady at 4%.
Last week, the major averages were a mixed bag in the end, with the Dow (^DJI) eking out a weekly gain while the tech-heavy Nasdaq (^IXIC) lost over 4%. After forfeiting its year-to-date gains at the week’s lows, the S&P 500 (^GSPC) enters March just barely in the green.
Nvidia’s (NVDA) earnings report on Wednesday showed AI investment remains robust, but with the stock’s huge run-up and expectations sky-high, shares ended the week down over 9%.
A sharp drop in bitcoin (BTC-USD), which briefly cracked $80,000 for the first time since early November, also reflected the market’s overall risk-off stance that dominated the week’s proceedings.
And that brings investors into the month of March with more questions than answers as tariff deadlines loom, the Federal Reserve’s next meeting fast approaches, and the US economy faces the burden of trying to disprove investors’ fears about a growth scare.
For years, the US economy has faced predictions of an impending downturn. For years, the US labor market has continued to be at the center of pushing off those concerns.
In March, the story may be much of the same.
Wall Street economists expect there were 143,000 new nonfarm payroll jobs created last month while the unemployment rate held at 4%.
But clear signs of softness in the job market have been emerging for months.
Initial jobless claims last week reached their highest level of the year. Continuing claims for workers that have been receiving unemployment benefits for longer than a week continue to rise.
Adding another wrinkle to the US labor outlook are the actions out of Washington, where the Elon Musk-led Department of Government Efficiency (DOGE) has set the table for a sharp pullback in government employment to weigh on this data in the months ahead.
“Despite the headlines, the three-pronged attack on the federal workforce by President Trump and Elon Musk in recent weeks — the hiring freeze, buyout offer, and mass layoffs of probationary workers — should have minimal impact on February’s payroll,” wrote Capital Economics economist Bradley Saunders in a note on Thursday.
Looking forward, however, the state of play may not be so benign.
“Layoffs are also likely to accumulate more over time given the administration’s plan to further reduce the Federal workforce,” wrote Bank of America’s economics team led by Aditya Bhave on Friday.
“We estimate that the direct effect of the administration’s actions could amount to a reduction of more than 200k in Federal employment by the end of the fiscal year.” The government’s fiscal year, we’d note, ends on Sept. 30.
Elon Musk speaks during a Cabinet meeting with President Donald Trump at the White House in Washington, Wednesday, Feb. 26, 2025. (Pool via AP) ·ASSOCIATED PRESS
BofA’s team also notes federal contractors could rein in hiring depending on where budget cuts do or don’t materialize from Congress. Moreover, a slowdown in spending from federal workers who lose their jobs would be a drag on overall activity too.
“In short,” BofA wrote, “the actions taken to reduce the size of Federal employment are an upside risk to our yearend unemployment rate forecast of 4.2%.”
Every retail company tells two stories — its own and the economy’s.
In the week ahead, the three most prominent retailers that will report results — Costco (COST), Abercrombie & Fitch (ANF), and Target (TGT) — have plenty to say on both.
Costco has been a decades-long winner. The late Charlie Munger, a former board member, once said it was a “perfect damn company” save for its expensive stock — shares of Costco currently trade at 60 times last year’s earnings.
Its customers and investors are fanatics. The no-frills appeal of a Costco warehouse and the headache of navigating its parking lots on a busy weekend are well-known.
Back in December, the company said on its earnings call, “We’re seeing the member being very choiceful about how they’re spending [their] dollars.” Economic data of late would suggest these trends have continued.
People walk through the parking lot at a Costco Wholesale store on February 1, 2025, in Bayonne, New Jersey. (Photo by Gary Hershorn/Getty Images) ·Gary Hershorn via Getty Images
Target has lost ground to its bigger rivals — notably Walmart — over the last several years.
After its most recent quarterly report in November, the stock fell 20%. In January, the company tried to calm investor nerves by announcing holiday sales rose 2.8%, with the company notching records on Black Friday and Cyber Monday.
Still, that update came with no change to its profit outlook.
Target stock comes into this week’s report down over 8% this year and is trading near its lowest level since November 2023.
“When we assess the consumer and macro environment, we’re seeing many of the same themes that have defined the environment for some time,” Target CEO Brian Cornell told investors in November.
“Consumers tell us their budgets remain stretched and they’re shopping carefully as they work to overcome the cumulative impact of multiple years of price inflation.”
Abercrombie, meanwhile, has ridden a dual wave of hitting Gen Z trends and a wave of millennial nostalgia and has been one of the best stories in apparel over the last five years.
Over that time, the S&P 500 has doubled; Abercrombie stock is up over 600%.
While Costco and Target are merchants of household essentials, Abercrombie is more positioned to benefit from the US consumer’s relentless ability to find the money to refresh their wardrobe.
“We are no longer a jeans and T-shirt company,” CEO Fran Horowitz said in November. “We’re really, truly a lifestyle brand. The consumer comes to us now, in their early 20s. They stay well into their 40s.”
In the depths of the pandemic, some investors arrived at ANF stock in the single digits. Some of them will enter March 2025 over $100.
The causes of any period of market stress or euphoria can always be debated.
Prices leave less room for interpretation.
Tech stocks lagged this week, and some of the most notable trades that gripped investors after President Trump’s election win showed real signs of weakness.
Tesla (TSLA) stock finished February down almost 30% for the month; shares have now gone basically nowhere since Trump’s win.
In a note to clients on Friday, Bank of America strategist Michael Hartnett, one of the more colorful commentators on the Street, noted weakness in bitcoin and its inability to hold in the mid-$90,000s “was [the] first sign [of the] ‘bro bubble’ popping.”
Also in this group, in Hartnett’s view, are names like Meta (META) and Palantir (PLTR), along with the S&P 500 and Nasdaq.
With US polls still open on the afternoon of Nov. 5, the S&P 500 closed at 5,783. On Friday, the index closed at 5,912.
In Hartnett’s view, the index returning to this level — which it touched during the day on Thursday — “[would be the] first strike price of [a] Trump put, below which ‘Stocks Down Under Trump’ headlines begin, below which investors currently long risk would very much expect and need some verbal support for markets from policymakers.”
During his first term in office, Trump was a regular commentator on movements in the stock market.
Trump’s second term has taken a different shape, with more focus on tariffs, the Treasury market, and DOGE.
What it might take to bring the president’s attention back to the stock market is up for debate, but the price of stocks when the moment comes will leave little doubt.
Economic data: S&P Global Manufacturing PMI, February (51.6 previously); ISM Manufacturing PMI, February (50.5 expected; 50.9 previously)
Earnings: Plug Power (PLUG), GitLab (GTLB), Okta (OKTA), B. Riley Financial (RILY)
Economic data: No notable economic data expected.
Earnings: Target (TGT), Best Buy (BBY), AutoZone (AZO), On Holding (ONON), CrowdStrike (CRWD), Nordstrom (JWN), Ross Stores (ROST)
Economic data: ADP Private Payrolls, February (+148,000 expected; +183,000 previously); S&P Global Services PMI, February (49.7 previously); ISM Services PMI, February (53.0 expected; 52.8 previously); Factory orders, January (+1.4% expected; -0.9% previously); Federal Reserve Beige Book
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