S&P 500 earnings per share estimates problem monster

The market has a problem (CSA Archiva/Getty Images)

The “most important variable” for a rally that sticks

“It will take more than just an oversold market to get more than a tradable rally,” wrote Mike Wilson, a top equity watcher at Morgan Stanley.

Matt Phillips

3/18/25 6:00AM

Why did the market’s “momo” seem to suddenly evaporate in February? What caused it? Angst over AI profitability? The never-ending story of President Trump’s tariff announcements? Concern over the collapse of the transatlantic alliance? Stubborn inflation?

In markets, as with improv comedy, the answer must be, “Yes, and.”

But more importantly, how will we know if stocks are ready to get out of this ditch? After all, on Friday, the S&P 500 enjoyed its biggest jump of the year, with a 2.1% increase. With Monday’s 0.64% increase, the blue-chip index has had its best two-day gain, 2.8%, since Trump triumphed last November. Is this rally for real?

Morgan Stanley stock watcher Mike Wilson was out with a note over the weekend giving his two cents on whether the upturn could mark an end to the whipsaw trading that bedeviled traders over the last month: “The short answer is, probably not,” he wrote. He continued:

“In my view, it will take more than just an oversold market to get more than a tradable rally. We firmly believe that earnings revisions is the most important variable, and while we could see some seasonal strength/stabilization in revisions, we believe it will take a few quarters for this factor to resume a positive uptrend.”

As you can see from the chart above, the drop in S&P 500 earnings per share estimates for 2025 has stabilized in recent weeks. An important driver of that decline in expectations, simply because of their massive market capitalizations, has been a drop in profit expectations for a few giant tech firms including Apple, Microsoft, and Tesla.

Signs of stabilization in earnings expectations for these companies is key for getting overall revisions to start to turn up, supporting an ongoing rally. But so far, only Microsoft has shown signs of life after reporting its results in late January.

Luke Kawa45s

Strategy jumps as MSCI allows digital asset treasury companies to stay in global indexes

In a massive reprieve for Strategy, index provider MSCI is letting digital asset companies stay in its benchmarks, sending shares sharply higher in after-hours trading.

The index provider had floated a proposal in which firms where crypto holdings are more than 50% of assets would be excluded from its global indexes, but has decided not to proceed with this for now.

“MSCI has determined at this time not to implement the proposal to exclude digital asset treasury companies (‘DATCOs’) from the MSCI Global Investable Market Indexes (‘MSCI Indexes’) as part of the February 2026 Index Review,” per a statement.

Getting kicked out of key indexes would have caused funds to flow out of Strategy, the largest digital asset treasury company, and its peers.

“At this time,” of course, means the door is open to reconsidering this down the road, as MSCI plans on having a broader review and consultation on the treatment of DAT companies.

“Distinguishing between investment companies and other companies that hold non-operating assets, such as digital assets, as part of their core operations rather than for investment purposes requires further research and consultation with market participants,” according to MSCI.

Matt Phillips2h

Rocket Lab surges to second straight record-high close

Retail favorite Rocket Lab closed at a new all-time high on Tuesday, continuing a remarkable run over the last month that has carried the launch services provider and aspiring Space X competitor up more than 70% over the last month (compared to its close of $49.06 on December 5).

Rocket Lab saw elevated options activity during its run-up today, with well over 3.5x the 90-day average in options volume changing hands over the course of the day.

Other space plays such as AST SpaceMobile and EchoStar surged today.

Despite being a money-losing company — it’s never turned an annual profit as a public company — Rocket Lab’s share price has soared nearly 1,500% over the last two years, generating tons of loyalty and enthusiasm among retail investors.

In fact, Goldman Sachs has made Rocket Lab the heaviest weighting in the latest iteration of its GS Memes basket of thematic stocks, just ahead of AST SpaceMobile, showing how enamored traders have become of such space stocks.

CHICAGO, IL - MARCH 05: Benny, the mascot for the Chicago Bulls entertains during a break between the Bulls and the Boston Celtics at the United Center on March 5, 2018 in Chicago, Illinois.

The S&P 500 closes at a record high

The Nasdaq 100 and Russell 2000 outperformed, rising 0.9% and 1.4%, respectively.

Tasha Matsumoto2h

Max Knoblauch5h

JetBlue takes off on bullish options activity

Low-cost airline JetBlue is up more than 8% on Tuesday, on pace for its biggest daily gain since August. If the price momentum holds, Tuesday will mark JetBlue’s sixth-best trading day of the past 52 weeks.

The carrier is being propelled by bullish options activity, with more than 53,000 call options changing hands as of 12:14 p.m. ET, nearly 4x the 20-day average for a full session.

JetBlue closed up 4.6% on Monday, as traders appeared to price in medium-term oil supply relief due to the possibility of Venezuela’s reserves getting more developed amid tensions with the US.

J. Edward Moreno6h

Moderna rallies after BofA raises its price target to $24 from $21

Moderna rose on Tuesday after Bank of America analysts raised their price target for the ailing biotech behind the COVID-19 vaccine, painting a rosy picture of the products in its pipeline.

BofA kept Moderna’s “underperform” rating but raised its price target to $24 from $21, which now accounts for “refreshed revenue builds for lead assets.” Analysts said the company’s cost-cutting measures, paired with potential new revenue from its investigatory oncology vaccines, could bring it back to profitability in the coming years.

Moderna is best known for being tapped by the US government to quickly develop a vaccine for COVID-19 in 2020, a product that remains its single source of revenue. The company has yet to bring new products to market and is now faced with a second Trump administration hostile to that product.