Wall Street Daily (March 12): US stocks traded narrowly on Wednesday, traditional heavyweights under pressure, while tech showed relative resilience; rising oil prices + inflation pressures kept the market in a defensive structural divergence.

Summary: On Wednesday, US stocks continued to show narrow divergence, with the S&P 500 Index down 0.08%, the Nasdaq up 0.08%, the Dow Jones Industrial Average down 0.61%, and the Russell 2000 Index down 0.20%; VIX fell to 24.23, down 2.81% for the day, indicating continued easing of acute panic, but the high volatility environment has not ended. The key theme in the session was parallel pricing of 'ongoing macro pressures + tech earnings support': On one hand, February US CPI year-on-year at 2.4% and month-on-month at 0.3% provided no new catalysts for rapid rate cuts; on the other hand, Oracle's strong results and Tesla's improved sales in China helped maintain relative resilience in the tech sector. In major asset classes, the US Dollar Index rose by 0.34%, gold fell by 0.30%, crude oil increased by 2.34%, and Bitcoin rose by 0.93%. Overall, the market transitioned from 'full defense' to 'structural defense': indices were weak, but capital still sought opportunities in fewer higher-certainty directions.

I. Major Events

1. US CPI largely met expectations, with markets maintaining a 'slow variable' outlook.

February US CPI came in at 2.4% year-on-year and 0.3% month-on-month, neither deviating from expectations nor triggering a sharp repricing of interest rate paths. Capital did not move towards either a 'full risk recovery' or an 'urgent pullback,' but instead continued balancing between slowing growth, sticky inflation, and rising oil prices. This reflected in the session as broad weakness but not out of control, tech showing relative resilience, sentiment improving but still far from optimistic.

2. Geopolitical risks shifted from 'shock' to 'digestion.'

Supply concerns related to Iran war fears persisted on March 11, with Brent and WTI continuing to rise, and energy risk premiums yet to recede. However, unlike the previous sharp sell-off phase, the stock market did not experience another rout that day, with only minor divergences among the four indices. This indicates that the market is starting to absorb geopolitical disruptions as part of a 'normal disturbance' rather than treating them as 'sudden shocks.' For trading structures, this kind of environment is more likely to foster rotation and structural opportunities rather than evolving into a one-sided trend.

3, Oracle's earnings exceeded expectations + Tesla's sales in China surged

Oracle's after-hours earnings exceeded expectations and guidance was raised. Coupled with Tesla's high year-on-year delivery growth in China in February, the technology supply chain received a small but 'verifiable' increment of fundamental information. As a result, the Nasdaq managed to close slightly higher despite macro pressures, with TSLA leading the M7 pack, while traditional heavyweight sectors clearly lagged behind. This means that the current market is not without opportunities; they are just more concentrated, often unfolding around sectors with clearer earnings and guidance.

II. Major Trends

From a two-week perspective, the pressure on small-cap stocks remains the most evident, with IWM falling 4.43% over two weeks, indicating that risk budgets still flow preferentially to assets with higher certainty. Meanwhile, the relationship between heavyweights and breadth has not simply reverted to 'heavyweights taking all the glory': Over a three-month horizon, RSP still outperformed SPY (1.35% vs -1.57%), showing that the mid-term market is still characterized by dispersed rallies and sector rotation. In terms of style, SPYV continued to outperform SPYG (0.64% vs -3.45%), with value still dominating; growth is merely 'relatively resilient' and does not yet constitute a clear style reversal. Combined with the day’s rising oil prices and sticky inflation, the short-term market seems to be seeking localized offense within a defensive framework.

III. Market Sentiment

In terms of sentiment readings, the market is slowly retreating from a high-pressure state. The VIX dropped to 24.23, decreasing by another 2.81% from the previous day, indicating that the most tense phase has passed, but the absolute level remains above 24, meaning trading still requires protection against volatility. The CNN Fear & Greed Index rose marginally from 26 to 27, showing only slight improvement and staying within the fear zone, consistent with the weak oscillation performance of the indices that day. RSP outperforming SPY over a three-month period also suggests that funds have not returned to the single path of 'heavily weighting a few giants'; at the same time, the demand for options protection persists, indicating that the market is willing to bet on structural opportunities but remains cautious in position management. Overall sentiment can be summarized as: panic receding, but optimism is premature.

IV. Market Scan

1. Index ETFs

Among index ETFs, QQQ fell by 0.01% but remained relatively strong, while DIA fell by 0.60%, clearly lagging behind, indicating that capital preference continues to concentrate on growth-heavyweights rather than traditional blue chips. Comparing small-cap and large-cap trends, the market has not entered a stage of comprehensive risk appetite recovery, instead resembling a 'defensive-leaning growth' allocation under limited risk budgets.

2. Sector Performance

Sector divergence widened further compared to the previous day. XLE rose by 2.48% to become the leader, directly reflecting the rise in crude oil prices by 2.34%, which lifted earnings expectations; XLP fell by 1.32%, dragging down performance, reflecting internal profit divergence within defensive consumption; XLRE fell by 1.19%, showing that the rebalancing of interest rates and growth expectations still suppressed the real estate sector. Overall, the rotation did not spread into a broad-based rally; it was more about 'a few sectors strengthening based on favorable conditions and expectations under macro constraints'.

3. Seven tech giants

Within the M7 group, strength and weakness diverged further. TSLA rose by 2.15% to lead gains, with improved sales data reinforcing expectations of short-term demand resilience; NFLX fell by 2.11%, reflecting that in a more defensively styled phase, highly valued growth stocks tend to retreat first. The Nasdaq’s ability to close slightly positive relied more on the support of leading stocks rather than a broad-based upward movement across the tech sector.

4. Chinese Equities

Chinese concept stocks showed significant divergence during the day. JD rose by 1.37%, performing relatively steadily, while TME fell by 4.37%, BILI dropped by 3.99%, and NTES fell by 2.11%, with high-elasticity growth chains giving back more noticeably. Overall, there was no unified catalyst sufficient to drive a broad-based sector rally that day; fund behavior seemed more like rebalancing positions in a high-volatility environment: retaining relatively stable targets on one hand, while cooling off higher-elasticity, more volatile stocks on the other.

5. Cryptocurrencies

Bitcoin’s latest quote reflected a 0.93% increase on the day, showing that high-volatility assets still have momentum for recovery, but related concept stocks did not form a synchronized broad-based rally. RIOT rose by 1.16%, maintaining relative strength, while CRCL fell by 4.47%, clearly giving back gains, indicating that the crypto chain is shifting from 'theme resonance' to 'individual stock differentiation'. In the current market environment, this direction still has elasticity, but sustainability depends on further improvement in risk appetite.

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