U.S. Markets Tumble as Fed Holds Steady, Munis Face Volatility

On February 27, 2025, U.S. stock markets experienced a decline, with the S&P 500 index dropping 1.59%, the Dow Jones Industrial Average falling 0.45%, and the Nasdaq Composite index decreasing 2.78%. The Cleveland Federal Reserve Bank President, Beth Hammack, stated that interest rates are not yet significantly restrictive, emphasizing the need to maintain stability for a period to monitor inflation trends. This cautious approach by the Federal Reserve has impacted market expectations regarding future monetary policy. Additionally, the S&P Global report highlighted potential fluctuations in U.S. local government credit quality due to unpredictable federal policy changes, which could create volatility in municipal bonds and affect investor sentiment and broader market stability.

Based on the market performance, the Utilities sector and Technology industry underperformed the S&P index. Meanwhile, the Consumer Staples sector, Energy sector, Real Estate sector, and Financial sector bucked the trend and rose.

Nvidia's stock plummeted by 8.48% on Tuesday, as the company's guidance for first quarter gross margins fell short of expectations. Oracle also took a hit, dropping 4.47%, with a concerning 6% decline in its trailing 12-month free cash flow. TSMC, the world's largest contract chipmaker, saw its stock price fall by 6.95% amid market panic. Salesforce shares fell by 4.04% after the company's revenue guidance for fiscal 2026 missed expectations. ASML Holding, a key supplier to the semiconductor industry, saw its stock drop by 6.59% following a price objective reduction by JPMorgan Chase & Co. Tesla, the electric vehicle maker, saw its stock fall by 3.04% as concerns over Elon Musk's political activities weighed on the company's business. Broadcom shares fell by 7.11% after Jim Cramer revealed that his trust had sold the stock, indicating that it was no longer considered expensive. SAP SE (SAP) stock price forecast for the next 12 months was revised down to $238.0, leading to a 3.95% drop in the company's shares.

Urgent.ly surged 60.50% today, securing a $20 million credit facility to fuel market expansion and debt restructuring. PepGen also rose significantly, up 58.82%, following promising data from single-dose trials of PGN-EDODM1, which suggests its approach is on par with, if not superior to, current leaders in the field. Meanwhile, SUNation Energy plummeted 63.26% due to financial pressure from a year-to-date stock decline. Ibotta also fell sharply, down 46.09%, following weaker-than-expected fourth-quarter results and disappointing forecasts that led to downgrades.

The Federal Reserve's Beth Hammack stated that interest rates should remain stable for some time to monitor inflation's return to the 2% target, indicating a cautious approach to monetary policy. Meanwhile, Elon Musk warned of a potential collapse in the U.S. air traffic control communication system, with SpaceX's Starlink being deployed to address the issue. Additionally, Microsoft is urging the U.S. government to relax export controls on AI chips, arguing that current restrictions hinder technological advancement. Lastly, Alphabet's Google is reportedly laying off fewer than 100 employees in its cloud division to reallocate resources towards business and AI investments.