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The Dow Jones Industrial Average recovered from another 1,000-point intraday decline on Friday amid another volatile session to end a volatile week. Investors, traders and speculators will now consider the implications of a sagging employment market as they process an escalating conflict in the Middle East.
According to the February jobs report, the U.S. nonfarm payrolls declined by 92,000 last month. “The biggest issue is what does this negative number mean for monetary policy,” Raymond James Chief Economist Eugenio J. Alemán writes.
Officials will discuss interest rates while “oil prices and gasoline prices are up and thus, inflation is probably on its way up” at the next Fed meeting. As Alemán sees it, “This is probably the worst scenario for monetary policy, and we will probably hear the term ‘stagflation’ repeated once again together with an ‘Iranian crisis’.”
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Voting members of the Federal Open Market Committee (FOMC) are unlikely to change their minds about the target range for the federal funds rate “for now” and “will wait to get more data on the risks for their dual mandate between inflation and employment,” the economist concludes.
Next week’s economic calendar presents a fascinating problem for the Fed. The Bureau of Labor Statistics (BLS) will release Consumer Price Index (CPI) data for February on Wednesday, March 11, at 8:30 am Eastern Standard Time.
Then, on Friday at 8:30 am ET, the Bureau of Economic Analysis (BEA) will release Personal Consumption Expenditures Price Index (PCE) data for January. The Fed prefers PCE over CPI as a gauge of price stability. But the release of the January PCE data was delayed by a government shutdown.
Does the delay make a difference? Does the PCE-vs-CPI issue even matter, given the potential impact of a crude spike on prices across the board? And how much are these questions complicated by the fact that Kevin Warsh will replace Jerome Powell as Fed chair in May, pending Senate approval?
Stay tuned: We’ll track developments around the upcoming FOMC meeting on our live Fed blog starting March 16.
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Fear is rising
Energy stocks showed relative strength again on Friday, as the front-month West Texas Intermediate (WTI) crude oil futures rose as much as 14.3% to extend the contract’s biggest-ever weekly move to more than 35% and above $90 per barrel. Brent crude oil futures topped $90 for the first time since April 2024.
According to The Wall Street Journal, Kuwait has cut production at some oil fields due to a lack of storage. Iran has effectively shut down traffic through the Strait of Hormuz and out of the Persian Gulf, bottling up Kuwait’s output.
Boeing (BA, +4.1%) was one of nine Dow Jones stocks to close in positive territory, as Chevron (CVX, +0.02%) also edged up. Financial stocks were some of the biggest decliners on the 30-stock index, as American Express (AXP, -2.0%), Goldman Sachs (GS, -1.7%), JPMorgan Chase (JPM, -1.4%) and Visa (V, -0.7%) all put up red numbers.
The Cboe Volatility Index (VIX) surged to 29.06 at its Friday peak and ended the week near its session highs. The VIX closed last week at 19.86. A normal range for the stock market’s “fear index” is between 12 and 20.
At the closing bell, the blue-chip Dow Jones Industrial Average was down 0.95% at 47,501 to finish the week with a loss of 3.0%. The broad-based S&P 500 had shed 1.3% to 6,740, extending its weekly loss to 2.0%. The tech-heavy Nasdaq Composite was lower by 1.6% on Friday and 1.2% for the week at 22,387.
Network interconnects lift MRVL
Marvell Technologies (MRVL) made a major countertrend move among semiconductor stocks, rising 18.4% after beating Wall Street’s top- and bottom-line estimates and offering better-than-expected guidance. Note that the iShares Semiconductor ETF (SOXX) was down 4.2%.
“We expect year-over-year revenue growth to accelerate each quarter in fiscal 2027, driven by continued strength in our data center business, with bookings continuing to grow at a record pace,” CEO Mark Murphy said.
Data-center revenue, driven by demand for network interconnect hardware, was up 21% to $1.65 billion and exceeded a $1.63 billion forecast. Management guided to first-quarter EPS of 79 cents on revenue of $2.4 billion vs a Wall Street forecast for 74 cents on revenue of $2.28 billion.
Susquehanna analyst Christopher Rolland reiterated his Positive (Buy) rating and his $100 12-month target price for MRVL, citing “a robust opportunity set across custom ASICs, interconnects, and now scale-up photonic.”
DAWN rises on M&A
Biopharmaceutical companies do highly specialized fundamental work. Biotech stocks are inherently volatile because of the difficulty of bringing to market and pricing new medicines and therapies. It’s the kind of dynamic sector-focused exchange-traded funds (ETFs) are built to address.
At the same time, there’s no guarantee that even the best biotech ETFs are going to capture the kind of moves we see on a regular basis in the space. The relationships simply aren’t as direct as they are with, say, rising crude oil prices and energy ETFs.
Today, for example, Day One Biopharmaceuticals (DAWN) surged 66% on the announcement that the holding company has agreed to be acquired by Servier, an independent international pharmaceutical group governed by a foundation, for $21.50 per share in cash in a relatively small $2.5 billion deal.
Servier focuses on rare cancers and targeted therapies, and DAWN fits a specific purpose within its oncology portfolio.
Most biotech ETFs were down along with the broader market. But the SPDR S&P Biotech ETF (XBI), with a portfolio that tilts toward mid-cap stocks and small-cap stocks, was up 0.1%.
The iShares Biotechnology ETF (IBB), the largest and most established biotech ETF, was down 0.7%, and the Invesco Biotechnology & Genome ETF (PBE) declined by 1.7%. With crude oil up as much as 10% on Friday, the Energy Select Sector SPDR Fund (XLE) was higher by 0.1%.