This week witnessed significant volatility across global equity markets, driven by conflicting economic signals, geopolitical uncertainties, and mixed corporate earnings. The S&P 500 retreated from near-record highs, while the Dow Jones Industrial Average suffered its worst weekly decline in over a year.
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The S&P 500 fell 1.7% on Friday, February 21, erasing early-week gains and closing the week down 1.6%. The index briefly flirted with a new all-time high midweek but reversed course following disappointing consumer sentiment data and renewed tariff concerns. Similarly, the Nasdaq Composite dropped 2.5% for the week, while the Dow Jones Industrial Average plunged 2.8%, losing over 1,200 points from Wednesday’s peak. This marked the Dow’s largest three-day decline since January 2024, with UnitedHealth (UNH) contributing significantly to losses after reports of a Department of Justice probe into its Medicare billing practices.
Safe-Haven Demand
Investors flocked to defensive sectors amid growing economic uncertainty. The healthcare sector (+0.89%) and consumer defensive sector (+0.68%) outperformed, with Coca-Cola (KO) and Procter & Gamble (PG) gaining 2% and 1.7%, respectively. Conversely, cyclical sectors bore the brunt of selling pressure:
- Consumer discretionary plunged 4.06% amid weak retail sales data and Walmart’s (WMT) downward guidance.
- Communication services dropped 3.67% as streaming and advertising stocks faltered.
Energy and Commodities
West Texas Intermediate crude tumbled 0.5% to $70.22/barrel, reflecting demand concerns tied to slowing global growth. Gold, however, extended its rally to an eighth consecutive week, closing at $2,936/oz as investors sought inflation hedges.
Sticky Inflation Metrics
The February S&P Global Flash PMI revealed stagnant business activity growth (50.1 vs. 52.0 prior), with input cost inflation accelerating to a seven-month high. This followed hotter-than-expected CPI (+0.4% MoM) and PPI (+0.3% MoM) prints earlier in the week, which reinforced fears of prolonged monetary tightening.
Consumer Sentiment Collapse
The University of Michigan’s Consumer Sentiment Index plummeted to 64.7 in February (vs. 71.7 in January), its lowest reading since November 2023. Notably, one-year inflation expectations surged to 4.3%, complicating the Federal Reserve’s policy calculus.
Earnings Spotlight
- Walmart (WMT): Shares slid 5% after the retailer warned of margin compression from tariff-related cost increases.
- Celsius Holdings (CELH): Soared 30% on its $1.8 billion acquisition of Alani Nu, positioning the combined entity as a dominant player in the energy drink market.
- Moderna (MRNA): Gained 5% amid renewed COVID-19 variant concerns, though weekly options implied volatility remained elevated at 11.1%.
Regulatory Risks
UnitedHealth (UNH) collapsed 7% on Friday following news of a DOJ investigation into Medicare Advantage billing practices. The probe could jeopardize $25 billion in annual government reimbursements, prompting analysts to revise earnings estimates downward.
Yield Curve Shifts
The 2-year Treasury yield fell 5 basis points to 4.15%, while the 30-year yield dropped 7 basis points to 4.67%, reflecting a flight to safety. Futures markets now price in a 68% probability of a Fed rate cut by June 2025, up from 55% the prior week.
Unusual Options Activity in Nvidia (NVDA)
On Cheddar Flow, there were three large put‐sweep orders on NVDA, all expiring in just 6 days on February 28, 2025. Two of them are at the 132 strike, while the top one is at 131. The 131‐strike put has a volume of 7,622 versus an open interest of 7,496 (V/OI ≈ 1.02). One of the 132‐strike puts shows a volume of 22,342 against an OI of 11,176 (V/OI ≈ 2.0), and the other 132‐strike put has a volume of 10,656 versus the same OI (V/OI ≈ 0.95).
Premiums range roughly from $2.3 million to $3 million per sweep, adding up to around $7.8 million total if combined. All three trades executed at the ask and were labeled as “Sweep,” suggesting urgency and potentially bearish positioning given that these are puts with only about one week left until expiration.
Dollar Weakness
The U.S. Dollar Index (DXY) declined 0.8% as soft economic data bolstered rate cut expectations. The euro capitalized on dollar weakness, rising 1.2% to $1.0950 amid hawkish ECB rhetoric.
