March Outlook: With Earnings Slowing And Fed Surprise Unlikely, Politics Take Charge

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Until late February, it looked like March might be a transitional kind of month, with earnings behind and the U.S. election season ahead. However, February ended with fears of the coronavirus spreading rapidly

However, February ended with fears of the coronavirus spreading rapidly as we see more cases. Investors got knocked back on their heels with a late-February sell-off, which saw major indices go negative for the year after starting the month with a huge rally.No one has any answers as coronavirus firmly occupies front and center going into the new month. The market had mostly been shrugging off the steady flow of virus headlines until late February’s huge plunge.

One thing besides the virus that does stand out about this March vs. other recent ones is politics. While this isn’t a political column, the market is definitely tuned into the presidential primaries, and investors should consider getting prepared for possible ramifications across sectors and asset classes.

These dynamics might start showing up in some sectors more than others, depending on which candidate or candidates seem to have the upper hand as March advances. Financial, Energy, and Health Care stocks could find themselves on shakier ground amid concerns about potential tighter regulations on banks, oil and gas production, and drug prices, for instance.

In fact, you could argue that relationships are “out of whack,” to use a scientific term. Both bonds and stocks have been moving quickly upward. Eventually it’s likely something might give, and the late-February activity pointed to stocks. The Feb. 24 market selloff really took a bite out of travel and semiconductor stocks. Information Technology as a sector got slammed. The virus is likely to determine whether these sectors get any relief in March.

MU isn’t the only “out of season” earnings highlight this coming month. Some other big names to look for include retailers Kohl’s , Dollar General , and Dollar Tree , tech companies Broadcom and Oracle , delivery firm FedEx , and Dow Jones Industrial Average member Nike .

 

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