Market News

• US stocks close lower but rebound into the close
• Crude oil settles at $6.35 higher or 8.51% at $81.01
• Kristi Noem is replaced as Homeland Security Secretary.
• Pres. Trump not looking to tap into the strategic petroleum reserve (SPR)
• European indices close sharply lower after reversing earlier gains
• Oil jumps above $78 helped by reported attack on Bahrain facility
• Energy and tech sectors drive mixed market movements
• Market Update: Gold reverses gains amid central-bank selling chatter
• Feds Barkin: Recent inflation data does raise doubts about whether the fight is over
• US unit labor costs for Q4 2.8% versus 2.0% expected. Productivity 2.8% vs 1.9% expected
• US import prices for January 0.2% vs. 0.2% expected. Export prices 0.6% vs 0.3% expected
• US…

Costco came in ahead on the top and bottom line in the after-hours report today. EPS landed at $4.58 vs. the $4.55 estimate, while total revenue hit $69.60B against the $69.27B consensus. Net income rose to $2.035B from $1.788B a year ago — a 13.8% jump.

The comp sales numbers are where it gets interesting for the macro view. Total company comps ex-gas and FX came in at +6.7%, well above the +5.9% estimate. Including gas and FX, comps printed +7.4% vs. the +6.72% consensus. The U.S. adjusted number was +6.4%, Canada +7.6%, and Other International +7.1%.

Digitally-enabled comparable sales surged 22.6% in Q2 (21.7% adjusted), showing the consumer is still spending and increasingly doing it online through Costco's platform.

Costco skews to the…

Major US stock indices are closing lower on the day, but well off the lowest levels. A late day fall in crude oil from a high of $82.16 down to the current level is $79.65 helped to shift the bias on hopes the worst has passed.

Looking at the major indices:

• Dow industrial average fell 784.67 points or -1.61% at 47954.74. At session lows the index was down 1162 points.
• S&P index fell -38.79 points or -0.56% at 6830.71. At session lows the index is down -98.72 points.
• NASDAQ index fell -58.50 points or -0.26% at 22748.99. At session lows, the index was down -307.19 points.
• Russell 2000 fell -50.43 points or -1.91% at 2585.57. At session lows, the index was down -75.01 points.

S&P components from strongest to the weakest.

🟢 Only 3 sectors green…

Crude oil crude oil futures settle at $81.01. That's up $6.35 or 8.51%. The gain is the largest since April 9, 2025. The high price reached $81.64. The low price was at $74.97. The price is trading at its highest level going back to July 2024.

Reports emerged that an oil facility in Bahrain’s Al-Ma'amir area was attacked, adding another layer of geopolitical risk to energy markets. Recently, crude oil prices showed some disconnect with the headlines. The market was less concerned thinking that damage would be minimal.

However, as trading progressed - and more reports about disruptions surfaced - the market shifted back to the familiar pattern where negative geopolitical news tends to push oil prices higher. That shift helped lift crude back…

Pres. Trump has replaced Homeland security Sec. Kristi Noem with Oklahoma Sen. Markwayne Mullen.

Kristi Noem has been under political pressure due to several controversies involving immigration enforcement, spending decisions, and congressional scrutiny.

1. Immigration enforcement incident A fatal incident involving immigration enforcement agents triggered protests and raised questions from lawmakers about the use of force and whether the Department of Homeland Security has been fully transparent about what happened.

2. Border security advertising campaign Noem has faced criticism over a large DHS advertising campaign promoting border security that featured her prominently. Some members of Congress are questioning the cost and the process used to…

Pres. Trump has replaced Homeland security Sec. Kristi Noem with Oklahoma Sen. Markwayne Mullen.

Kristi Noem has been under political pressure due to several controversies involving immigration enforcement, spending decisions, and congressional scrutiny.

1. Immigration enforcement incident A fatal incident involving immigration enforcement agents triggered protests and raised questions from lawmakers about the use of force and whether the Department of Homeland Security has been fully transparent about what happened.

2. Border security advertising campaign Noem has faced criticism over a large DHS advertising campaign promoting border security that featured her prominently. Some members of Congress are questioning the cost and the process used to…

Pres. Trump is saying that he is not looking to tap into the strategic petroleum reserve or SPR.

Trump's Chief of Staff Susie Wiles is also reportedly telling his advisors to bring ideas to the Oval Office to lower gasoline prices in the wake of the US attack on Iran. This is according to Politico citing sources.

Some ideas:

• A temporary holiday on the gasoline tax
• Using the US military to defend energy infrastructure in the Middle East.

The implications from creating problems by solving problems.

A gallon of regular gas has moved up from $2.89 a month ago to $3.25 today. That is a rise of 12.5%

Pres. Trump is saying that he is not looking to tap into the strategic petroleum reserve or SPR.

Trump's Chief of Staff Susie Wiles is also reportedly telling his advisors to bring ideas to the Oval Office to lower gasoline prices in the wake of the US attack on Iran. This is according to Politico citing sources.

Some ideas:

• A temporary holiday on the gasoline tax
• Using the US military to defend energy infrastructure in the Middle East.

The implications from creating problems by solving problems.

A gallon of regular gas has moved up from $2.89 a month ago to $3.25 today. That is a rise of 12.5%

• Prior was 212K (revised to 213K)
• Continuing claims 1868K vs 1850K expected
• Prior 1833K (revised to 1822K)

Initial claims beat, while continuing claims miss. They are both in the range of estimates though and not showing any material change. The market reaction has been minimal as the focus remains on the US-Iran war.

Tomorrow, we have the US NFP report. The February jobs data up until now has been good as ADP beat expectations yesterday and the employment indices in the ISM PMIs have improved further.

WHAT DO JOBLESS CLAIMS MEASURE?

The US Jobless Claims indicator is a high-frequency economic report that tracks how many people are applying for state unemployment benefits. It is considered one of the most timely gauges of the health of the US…

Import Prices:

• Prior month import prices 0.1% revised higher to 0.2%
• Import prices MoM for January 0.2% vs 0.2% expected
• Import Prices YoY x.x% vs 0.0% last month

Export Prices:

• Prior month export prices 0.3% revised higher to 0.6%
• Export prices MoM 0.6% vs 0.3%.

The U.S. Import and Export Price Indexes are released monthly by the Bureau of Labor Statistics (BLS) and measure how prices are changing for goods and services traded between the United States and the rest of the world.

Import prices track the average change in prices paid by U.S. buyers for goods and services purchased from foreign producers. Export prices measure the average change in prices received by U.S. producers for goods and services sold to foreign buyers.

The report is based…

Unit labor costs for Q4

• Prior quarter -1.9% revised to -1.8%
• Unit Labor costs for Q4 2.8% vs 2.0% expected

More details on Unit Labor costs from the BLS:

• Hourly compensation rose 5.7%, partly offset by 2.8% productivity growth.

• Year-over-year: Unit labor costs increased 1.3% over the past four quarters.

• Real hourly compensation: +3.1% in Q4; +1.3% year-over-year after adjusting for inflation.

• Labor share: 53.8% of output, the lowest level since records began in 1947.

• Current business cycle: Productivity has grown at a 2.2% annualized pace since Q4 2019, stronger than the 1.5% pace in the prior cycle (2007–2019).

Productivity for Q4

• Prior quarter 4.9% revised higher to 5.2%
• Productivity Q4 2.8% vs 1.9% expected
• Annual average productivity increased…

Headlines:

• Iran is ready to abandon its nuclear program if the US makes a satisfactory offer
• Is this a hint that the US-Iran conflict might stretch on for much longer?
• ECB's de Guindos: Baseline scenario is that US-Iran will be a short conflict
• ECB policymaker Villeroy: I do not see reason today why we should raise interest rates
• Eurozone January retail sales -0.1% vs +0.3% m/m expected
• Germany February construction PMI 43.7 vs 44.7 prior
• UK February construction PMI 44.5 vs 47.0 expected
• US February Challenger layoffs 48.307k vs 108.435k prior
• A friendly reminder that we do have the US non-farm payrolls tomorrow

Markets:

• WTI crude oil up 1.5% to $77.20, Brent crude oil up 1.3% to $83.69
• S&P 500 futures down 0.2% but recover from 0.5% losses…