Daily Market Summary – Feb 26th

Nvidia AI dominance

Nvidia solidified its dominance in the AI ecosystem, with CEO Jensen Huang proclaiming the company as the world's largest networking firm propelled by explosive demand for its Spectrum-X Ethernet platform, eclipsing traditional leaders like Cisco. The firm delivered another blockbuster quarter, reporting record revenues from AI chips and forecasting $78 billion in future earnings, even as shares dipped amid concerns over margins, competition from Intel and AMD, and cooling hype. Huang highlighted unrelenting demand, noting tech giants' unprecedented $700 billion spending on AI data centers this year alone, far from peaking, while AI investments create winners beyond the Magnificent Seven, particularly in adjacent sectors poised for substantial gains. Broadcom anticipates selling 1 million 3D stacked chips by 2027, underscoring the infrastructure buildout, as OpenAI establishes London as its largest non-U.S. research hub amid global talent wars, and Anthropic grapples with safety controversies, scaling back commitments amid Pentagon disputes and competitive pressures from rivals like DeepSeek withholding models from U.S. chipmakers.

Mortgage rates drop

Mortgage rates plunged below 6% for the first time since 2022, reaching 5.98% on 30-year loans per Freddie Mac, easing affordability and potentially igniting homebuying and refinancing activity despite persistent supply shortages. This drop, the lowest in nearly four years, could spur housing market momentum, though high prices remain a barrier. Complementing this, the Fed's top banking regulator prepares to unveil stringent new rules targeting mortgage lending practices, aiming to curb risks in a thawing market.

Mercosur-EU pact cocoa crisis

Argentina's Congress greenlit the long-stalled Mercosur-EU trade pact, removing a key obstacle to enhanced agricultural exports, manufacturing ties, and investment between the South American bloc and Europe. Yet global commodity pressures mounted as Ivory Coast and Ghana, supplying over 60% of world cocoa, confront a sales crisis from their rejected $400-per-tonne living income differential, leaving 400,000 tonnes unsold amid crashing prices, fiscal strain, and looming shortages; Ivory Coast plans farmer price cuts and an earlier mid-crop start. Supertanker charter rates surged on a war premium from geopolitical tensions, boosting very large crude carriers via rerouted voyages and risks, while oil prices held steady amid U.S.-Iran nuclear talks monitoring sanctions and supply.

Trump policy blueprint

Former President Trump's policy blueprint featured prominently, proposing 401(k)-style retirement accounts for every U.S. newborn seeded with $1,000 government funds, tax-free parental contributions up to $5,000 annually, employer matches, and U.S. stock investments to foster long-term wealth. Tariff refunds would flow to duty-paying companies rather than consumers, potentially padding corporate profits, though allies must sustain U.S. debt support amid fleeing investors risking instability; Portugal emerges vulnerable among EU nations due to export reliance in autos, wine, and textiles facing up to 20% duties threatening GDP and jobs. Plans to rescind Biden's tight independent contractor rules would lighten burdens on gig economy businesses, while IMF forecasts U.S. growth acceleration tempered by tariff and debt risks.

Fed rate cuts signal

Fed Governor Miran affirmed four quarter-point rate cuts this year despite no job market all-clear, signaling measured easing. U.S. initial jobless claims edged up modestly to 212,000, with layoffs at healthy levels indicating labor stabilization. Richmond Fed's Barkin attributed economic uncertainty, hiring hesitancy, and investment slowdowns to tariff chaos, questioning further cuts amid slowdown signals.

Yuan advance global policies

China's yuan notched its longest advance against the dollar since 2010 on policy bolstering and optimism, as U.S.-China dialogues with India aim to expand bilateral trade post-tariff court rulings, though both challenge Modi's factory incentives threatening manufacturing shifts. EU court advisers rebuffed Meta's antitrust appeal mandating Facebook data access for rivals, while OCC framed regulated stablecoins under the GENIUS Act to weave digital assets into banking. Japan's Sanae Takaichi appointed dovish Bank of Japan board members aligning with accommodative policy amid pressures.

Stellantis tech earnings

Stellantis weathered a $26.3 billion annual loss from impairments and EV strategy reversals but posted improving second-half shipments and profits signaling turnaround onset, with shares surging. Salesforce projected robust growth and massive buybacks easing AI spending profit fears, as IBM crushed Q4 with 4% revenue to $17.4 billion on hybrid cloud and AI, stock up 10%. Snowflake eyed surpassing annual product revenue on AI surge, Synopsys subdued by China export curbs on chip software, shares dropping sharply.

Mixed sector earnings

Earnings season unfolded with mixed corporate results across sectors. Tech saw Nvidia's beat steady markets despite debates on AI sustainability; CrowdStrike, IonQ, Shopify, and Zscaler soared on cybersecurity and quantum momentum, while C3.ai slashed 26% of staff amid cash burn admissions. Autos and retail: Urban Outfitters beat Q4 boosting resilience; Papa Johns to shutter hundreds of locations on sales drops and costs; eBay laid off 800 or 6% for realignment. Energy and materials: Cheniere, Eni exceeded expectations with buybacks; supertankers boomed. Finance: Private credit splits experts on crisis risks versus strength; Vanguard settled state suits. Media: Warner Bros. Discovery hit $252 million loss amid acquisition fights but Max subscribers topped 131 million.

Market volatility commodities

Broader markets reflected volatility: Dow climbed as S&P 500 and Nasdaq slipped post-Nvidia, with futures wobbling on earnings and Fed minutes; Asian shares rose on Nvidia boost. Commodities fluctuated—gold extended gains on tariffs, Iran tensions, safe-haven bids; oil buffered by U.S.-China stockpiles; soybeans ravaged by tariffs causing farmer losses; copper, wheat, corn mixed; cocoa crisis deepened. Crypto showed optimism despite fear, Bitcoin/Ethereum traders bullish, Circle earnings lit markets; coin mixers rebound. Housing rates dropped further, CDs/savings at 4% APY.

Regulatory geopolitical news

Regulatory and geopolitical ripples persisted: U.S. moves to sever Swiss MBaer bank over Iran/Russia/Venezuela ties; Kalshi probed insider trading by MrBeast editor. Trump's cheaper gas advocacy aided consumers but hammered oil revenues. EBRD noted tariffs spared emerging growth; Europe's energy prices fell from Ukraine war peaks but stayed elevated variably. AI safety feuds escalated between OpenAI/Anthropic, talent poaching; public backlash delays data centers/power projects.

Sector stock movements

Sector-specific moves highlighted investor rotations: Carlyle Group, Revolve, Arhaus stocks surged on catalysts; Nvidia dipped premarket cooling; MercadoLibre plunged. Walmart settled $100 million FTC driver pay suit; Google rolled Nano Banana 2 AI tool. Open source funding initiative launched by VCs/programmers; Norway's $1.7 trillion fund deploys AI for ESG screening. Job market saw thousands more youth unemployed despite hiring surge; attacks to dent Ukraine growth.