Wall Street Briefing (March 14): US stocks continued to weaken on Friday, with technology and small-cap stocks under pressure simultaneously; high oil prices and a policy vacuum extended defensive trading, making structural divergence more pronounced

Summary: US stocks continued to retreat on Friday, with the S&P 500 Index down 0.61%, Nasdaq down 0.93%, Dow Jones Industrial Average down 0.26%, and Russell 2000 Index down 0.36%; VIX remained at a high of 27.19, retreating only 0.37%, indicating that while the most urgent selling pressure had eased, the market was still in a high volatility range. The core theme of the day's session was no longer new single-point shocks but rather the continuous pressure from several ongoing factors: persistently high oil prices kept inflation and valuation concerns alive; the absence of new policy reassurances meant trading could only follow existing themes repeatedly; meanwhile, Apple's decision to lower App Store commissions in China further dampened sentiment for tech heavyweights. In terms of major asset classes, the dollar index rose 0.75%, gold fell 1.20%, crude oil climbed 3.03%, and Bitcoin gained 0.91%. Overall, the market maintained a defensive stance, but as the pace of declines slowed, structural divergence became more apparent.

I. Major Events

1. Oil prices remain hovering at high levels, with war risks continuing to weigh

The dominant variable in Friday's market was still the energy shock brought about by the Iran conflict. Although equity indices saw narrower declines compared to the previous day, crude oil still surged 3.03%, indicating that supply risk premiums had not significantly receded. For the stock market, the most direct impact of high oil prices is the resurgence of inflation concerns, which also kept valuation pressures persistent. As a result, US stocks weakened for the second consecutive day and recorded a weak weekly performance. The market did not witness another panic-driven sell-off, but under the constraints of high oil prices, risk budgets were still contracting.

2. Apple lowers commission rates in China, adding further pressure on large tech heavyweights

According to Reuters, Apple lowered its App Store commission rate, raising market concerns that this would weaken the profitability and bargaining power of its services business. While this news alone was not enough to dictate market direction on the day, it reinforced the existing narrative of 'fundamental pressures on tech heavyweights.' AAPL fell 2.21% on the day, causing Nasdaq to underperform relative to the Dow, reflecting that the tech sector had not yet seen a genuine return of risk appetite.

3. No new policy buffers, the market continues to trade on high oil prices and high volatility

By Friday's close, neither the Federal Reserve nor the White House economic team had released any new statements sufficient to significantly alter expectations. In the absence of clear policy signals, the market could only continue pricing along the trading framework formed over the previous two days: persistently high oil prices, unresolved inflation concerns, and a subdued rate-cutting expectation. The result was a relative outperformance in defensive sectors, while growth, platform, and trading assets remained under pressure. For investors, this means that in the short term, there is still no sign of a policy buffer to 'support expectations.'

II. Major Trends

The key point on Friday was not about 'a sharper decline,' but rather that 'the pattern of declines became more layered.' At the index level, all four major indices continued to fall, but compared with the broad sell-off of the previous day, the retracement was noticeably smaller. On the sector level, utilities rose by 0.99% to lead gains, while materials fell by 0.99%, marking the weakest performance. Signs were clearer that capital was retreating from cyclical sectors and shifting toward defensive cash-flow assets. From a medium-term perspective, the market structure has not undergone fundamental changes: over a three-month horizon, RSP still outperformed SPY (0.45% vs -2.57%), and SPYV continued to outperform SPYG (-0.40% vs -4.48%), indicating breadth and value still held the upper hand. Overall, Friday was more like a transitional day of 'slowing declines but not yet stabilizing,' with defensive trades remaining the main theme.

III. Market Sentiment

Sentiment remained chilly. The VIX stayed at a high of 27.19, with only a minor drop of 0.37%, indicating that the market did not further escalate into panic, but the defensive stance was far from being lifted. The CNN Fear & Greed Index dropped from 23 to 20, showing that investor sentiment continued to weaken. Meanwhile, the Put/Call ratio remained elevated, suggesting that demand for protective hedging had not significantly receded; also, the fact that RSP continued to outperform SPY over a three-month horizon indicated that the market had not returned to relying on a few mega-cap stocks for support. Overall, the market transitioned from 'acute shock' to 'high-pressure stalemate,' with sentiment still dominated by defensiveness.

IV. Market Scan

1. Index ETFs

All index ETFs closed lower, but the declines narrowed significantly compared to the previous day. DIA fell 0.23%, showing relatively the most stability, while QQQ dropped 0.59%, performing the weakest, indicating that traditional blue chips were better able to withstand current macro pressures than tech-heavyweights. Compared to the sharp selloff in small caps the previous day, IWM, though still weak on Friday, did not see an amplified decline, suggesting that the market was maintaining a defensive posture at lower levels rather than experiencing another concentrated stampede.

2. Sector Performance

Sector divergence was clearer than the index trends. XLU rose by 0.99%, leading gains, as funds parked more defensive positions in stable cash-flow assets such as utilities; in contrast, XLB fell by 0.99%, with pro-cyclical sectors continuing to bear dual pressures from growth expectations and commodity volatility. The most notable change on the day was not the emergence of a new leading theme, but rather a clearer shift from broad-based liquidation to defensive rotation: although risk appetite remained low, selling was no longer indiscriminate.

3. Seven tech giants

Within M7, differentiation continued. NFLX rose by 1.06%, becoming one of the few tech heavyweights to reverse gains; META fell by 3.83%, leading declines within the sector, indicating that valuation pressure on high-multiple platform stocks had not eased; AAPL fell by 2.21%, compounded by news of regulatory pressure from China affecting service business expectations. Overall, the tech sector had not yet regained risk appetite, but individual stocks showed some shifts in relative strength during the weak market.

4. Chinese Equities

Chinese stocks continued to show a differentiated pattern. TME rose by 3.73%, becoming one of the strongest Chinese stock performers of the day; FUTU fell by 1.31%, continuing profit-taking pressure around the earnings window. Market dynamics reflected that there was no systemic recovery in Chinese equities, with funds making choices between specific themes rather than returning to the entire set of Chinese assets.

5. Cryptocurrencies

Bitcoin rose by 0.91% on the day, with some recovery seen in high-volatility assets. Among related stocks, MARA surged by 6.39%, extending the high elasticity of crypto mining firms; HOOD fell by 3.59%, showing that trading platforms remained more vulnerable when risk appetite was weak. Overall, activity in the crypto chain appeared more like tactical moves by localized funds, insufficient to drive a broader market risk rebound.

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