Wall Street Daily (March 2): US stocks continued to diverge on Monday, with major indexes down and small-cap stocks up; Middle East crisis pushed oil and gold prices higher, but the market did not move towards one-sided risk aversion

Summary: US stocks presented a pattern of 'index divergence/sector rotation' on Monday. The S&P 500 rose by 0.04%, Nasdaq rose by 0.36%, Dow Jones fell by 0.15%, and Russell 2000 rose by 0.90%. On the one hand, the Middle East crisis drove volatility back up, along with stronger oil and gold prices; on the other hand, manufacturing data remained in the expansion zone, and interest rate expectations became more cautious. The VIX rose to 21.44, increasing by 7.96% in a single day, indicating a clear rise in hedging demand as capital switched between defensive and growth-oriented assets. In terms of major asset classes, gold rose by 0.8%, crude oil surged by 5.56%, the US dollar index increased by 0.93%, and Bitcoin rose by 4.65%. Overall, the market did not move towards one-sided risk aversion, but rather appeared to be repricing risks amid multiple intertwined factors.

I. Major Events

1. US manufacturing maintains expansion, cost pressures rise

The February ISM Manufacturing PMI was 52.4, staying above the boom-bust line for the second consecutive month, extending the momentum of manufacturing activity. At the same time, the increase in input prices heightened market concerns about sticky inflation once again. As a result, interest rate path expectations have become more cautious, with funds trading on growth resilience while also beginning to reassess the upward pressure on costs.

2. Tariff implementation and refund litigation proceed in parallel, with policy uncertainty persisting.

The new round of tariff measures by the Trump administration has entered the implementation phase, but corporate appeals for tariff refunds are still progressing through legal procedures. For many companies, the reality is that 'rules are being enforced, but outcomes remain pending.' This uncertainty is first reflected in corporate decision-making: capital expenditure timing, supply chain, and import-export arrangements are even harder to plan for the medium to long term, and corresponding valuations are more likely to be discounted due to uncertainty.

3. Middle East crisis pushes oil and gold prices higher, shifting market volatility upward.

Expectations of escalating geopolitical conflicts have driven up safe-haven demand, with crude oil and gold strengthening simultaneously, and risk-off trading becoming more concentrated during sessions. The energy sector has performed notably under the influence of rising oil prices. On the other hand, inflation spillover risks brought by the conflict have made markets more vigilant, constraining risk appetite for interest-rate-sensitive and high-valuation assets, thus pushing the volatility center higher.

II. Major Trends

From a two-week perspective, the short-term style remains 'some recovery but not smooth.' QQQ rose 1.03% over two weeks, but DIA, with heavier industrial weighting, fell 1.11% over the same period, showing the market's ongoing trial-and-error approach to cyclical directions. Extending the view to three months, the main trend remains intact: IWM gained 7.96% over three months, significantly outperforming SPY’s 1.01%; RSP rose 8.08%, continuing to lead SPY, indicating that the rally isn't solely supported by a few heavyweight stocks. In terms of style, SPYV increased 5.47% while SPYG dropped 2.75%, with value continuing to outperform growth. Overall, this is a phase of 'short-term deceleration, medium-term structure intact.'

III. Market Sentiment

The VIX rose to 21.44, up 7.96% in a single day, signaling a clear rise in hedging demand; the CNN Fear & Greed Index climbed to 42 (from a previous 38), with sentiment slightly recovering from the prior day but still within a cautious range. Regarding breadth, the number of advancing issues at 2,877 (51.8%) exceeded declining issues at 2,458 (44.2%), with new highs/new lows at 292/249, indicating no broad-based retreat. On the options front, the Total Put/Call Ratio (03:15 PM snapshot) stood at 0.96, with defensive sentiment rebounding but not yet reaching extreme panic levels.

IV. Market Scan

1. Index ETFs

At the index level, significant divergence emerged; the Russell 2000 led with a 0.90% gain, Nasdaq rose 0.36%, the S&P 500 edged up 0.04%, while the Dow Jones fell 0.15%.

2. Sector Performance

XLE surged 2.00%, leading gains directly benefiting from rising oil prices. Consumer staples XLP fell 1.44%, discretionary XLY declined 1.23%, and healthcare XLV dropped 1.04%. On the day, funds did not unilaterally favor traditional defensive sectors but leaned more toward event-driven and elastic directions.

3. Seven tech giants

Internal divergence among the seven giants continued. NVDA rose 2.99%, buoyed by news of increased investment in the photonics supply chain; GOOG fell 1.63%, showing weakness amid a lack of fresh catalysts. The tech theme hasn't faded, but the pattern of 'stronger leaders, more divergence among non-leaders' is becoming increasingly evident.

4. Chinese Equities

Chinese概念股 showed internal divergence. FUTU rose by 0.53%, demonstrating relatively stronger resilience; BILI fell by 2.40%, experiencing a more pronounced pullback during a period of fluctuating risk appetite. The pricing of Chinese概念股 by investors remains primarily driven by liquidity and risk preference factors.

5. Cryptocurrencies

As of 06:00 Beijing time on Tuesday, Bitcoin surged 4.65% for the day. Among related concept stocks, CRCL jumped 15.22%, continuing its highly volatile trading momentum; RIOT increased by 0.86%, also trending upward but with significantly less elasticity compared to the strongest performers, reflecting ongoing stratification within the sector.

$NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

421K Views