Market activity on Thursday was heavily influenced by concerns over economic momentum, trade policies, and the gradual implementation of artificial intelligence infrastructure. Technology shares, in particular, faced significant pressure, with the Nasdaq index poised for a correction if it settles below 18,157, indicating a drop of 10% or more from its peak close of 20,173 reached in December. Despite an initial surge of optimism following President Tim Donovan’s announcement to push back tariffs on Mexican imports until April 2, the market ended the day on a down note, overtaken by broader economic anxieties.
Job Market Concerns
The sell-off may have been exacerbated by apprehensions surrounding the upcoming employment report for February, which economists predict will show an addition of 160,000 nonfarm jobs, with unemployment holding steady at 4%. Average hourly earnings are expected to rise by 4.1% year-over-year. However, analysts suggest that these job gain estimates could be overly optimistic, especially in light of weaker-than-expected ADP employment figures released earlier this week, coupled with troubling data on job cuts from Challenger, Gray & Christmas. The latter indicated that layoffs in January hit their highest point since July 2020, primarily linked to corporate downsizing efforts.
Strategic Buying Amidst Volatility
While many investors are hesitant, we see a chance to take strategic action. We made purchases during the significant decline on Thursday, utilizing our substantial cash reserves to capitalize on the oversold market conditions as the S&P 500 marked a new intraday low. Our recent acquisitions include additional shares of Dover and the initiation of a position in Capital One. Going forward, we plan to remain patient, potentially holding off on further investments until the market experiences additional downturns that result in more attractive buying conditions.
Upcoming Earnings and Reports
In the wake of Thursday’s market close, key earnings reports are set to be released from notable companies including Broadcom and Costco, in addition to Gap and Hewlett Packard Enterprise. As we prepare for another busy trading day, the government’s jobs report will certainly be a focal point for market participants on Friday.
