Morning Brief
Headline News:
Equity futures point to a lower opening this morning following attacks by the U.S. and Israel on Iran over the weekend, with Iran launching its own strikes against several countries in the region as a response. The conflict has now entered its third day, sending oil prices sharply higher. Crude oil is currently up $5.42 (+8.1%) to $72.44 per barrel, with The New York Times reporting that tanker traffic is down around 70% in the Strait of Hormuz.
The market was relatively resilient to geopolitical developments in Iran last June when the U.S. bombed its top nuclear facility. Still, the sharp increase in oil prices and fears of a prolonged conflict could weigh on sentiment this time around. President Trump told reporters that the war with Iran could last 4 to 5 weeks, according to The New York Times.
Stocks were already in a “risk-off” posture before this weekend’s conflict, with mega-cap, tech, and small-cap stocks lagging on Friday, while energy and defensive sectors outperformed. Action has been choppy in recent sessions as concerns of AI disruption continue to spread into new pockets of the market.
The S&P 500 and DJIA will both enter the first session of March 0.3% below their respective 50-day moving averages, while the tech-heavy Nasdaq Composite lags further behind.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 is lower by 1.07% in early trading as geopolitical tensions escalate following the onset of U.S. military conflict with Iran. The immediate market response reflects concerns that higher crude oil prices could reaccelerate inflation, particularly in energy and transportation, thereby complicating the Federal Reserve’s policy outlook.
Safe-haven flows appear to be driving early positioning, with investors rotating defensively at the start of the week.
Technically, the first key support level at 6,858.47 is likely to be breached at the open. A decisive break below that level would shift focus to the next support at 6,775.50. If downside momentum accelerates, a deeper retracement toward 6,721.73 becomes increasingly probable.
Momentum indicators are deteriorating. The RSI turned lower on Friday and remains below the 50 level, signaling weakening upside momentum. Additionally, the Advance-Decline line rolled over, reflecting narrowing breadth and confirming internal market weakness.
If early selling pressure expands and downside volume broadens, the market could experience a momentum-driven decline throughout the trading session.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author, John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to buy or sell any company’s stock mentioned above.
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed due to the federal government’s timely principal and interest payment. Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall, and when interest rates fall, bond prices generally rise.
The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange and not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it focuses on smaller companies that focus on the U.S. market.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure is used as an indicator of market breadth and reflects the extent to which price movements are broadly distributed among NYSE-listed securities.