8 Key Items Shaping the Stock Market Friday

These are the early headlines and other items poised to influence the market at the start of trading Friday. As we share this collection of market drivers, U.S. equity futures point to a lower open, but we’ll want to revisit them once the market has a chance to digest this morning’s inflation data (see #2 below).

1. President Trump is weighing an initial limited military strike on Iran to force it to meet his demands for a nuclear deal, a first step that would be designed to pressure Tehran into an agreement but fall short of a full-scale attack that could inspire a major retaliation. (WSJ) The US has amassed a vast military force in the Middle East as President Donald Trump warned Iran to reach a deal within a “maximum” of 15 days or “bad things will happen”. The American build-up is enough to sustain a weeks-long air campaign, and its sheer scale and swiftness make an attack appear more likely, according to former Pentagon officials and national security experts. (FT)

Things have been building on this front all week, but the outcome is still shaping up to be a binary one. Eyeing oil prices and the failure of recent U.S.-Iran nuclear talks, suggests the market is leaning toward some sort of U.S.-led attack. Should that be the result, duration will be a key factor in all of this, and what that means for oil prices and incremental inflation pressures.

Meanwhile, gold and silver prices are moving higher, lifting related plays in our EPS Diplomats basket. As of last night, that basket was up just over 17% QTD.

2. The Federal Reserve’s preferred inflation gauge is expected to show prices rose faster in December, reinforcing policymakers’ increasing caution on cutting interest rates. The consensus call among economists surveyed by FactSet is that core personal consumption expenditures, which don’t include volatile food or energy prices, rose 0.37% in December from the prior month and 3.0% from a year earlier, up from 2.8% in November. Headline PCE is forecast to increase 0.3% on the month and 2.7% year over year. (Barron’s)

This morning’s December core PCE price index figure is the next piece of inflation data. If it is another log on "the inflation is ticking higher fire" that’s been burning, it will also add to the growing thought Fed rate cuts are increasingly off the table. Even Trump appointee Fed Governor Stephen Miran has scaled back his rate-cut expectations.

But even if the December core PCE price index surprises somewhat to the downside, let’s remember it’s data from December and was collected ahead of quarter-to-date reports about another round of companies boosting prices. While we will read through today’s December data, more important, in our view, is the February Flash PMI report from S&P Global that will be published at 9:45 AM ET, and what it says about output price growth.

3. The U.S. Supreme Court may soon invalidate President Donald Trump’s sweeping 2025 tariffs imposed under the International Emergency Economic Powers Act (IEEPA). (MarketWatch) More than $175 billion in U.S. tariff collections are at risk of having to be refunded if the U.S. Supreme Court rules against President Donald Trump's broad emergency tariffs, Penn-Wharton Budget Model economists said on Friday. (Reuters)

We’ve seen the expected date for this Supreme Court ruling come and go, and that could be the case again today. The key wording in reports discussing this is that the Supreme Court “could rule as early as today,” which doesn’t mean they will. Our thinking remains that when issued, the odds of a ruling pushing back on the legality of the IEEPA-based tariffs will have a go-forward effect. It’s simply too big a Gordian knot to untangle tariff refunds. Such a ruling would likely stoke uncertainty in the market, given indications the White House has already prepared a workaround.

4. U.S. equity funds saw a substantial inflow of capital in the week to February 18 on easing worries over a selloff in the technology sector after a cooler consumer price inflation report boosted expectations of Federal Reserve rate cuts. According to LSEG Lipper data, investors racked up a net $11.77 billion worth of U.S. equity funds, registering their largest net purchase for a week since January 14. (Reuters)

Normally, data like that would be a signal that some dip buying has been happening or is about to. Given the three points we just discussed and quarterly results next week from Nvidia  (NVDA) , that activity could be a wee bit early. Comfort levels in putting capital to work would increase if some of those risks fell to the wayside, and another week of substantial inflows into U.S. equities would also bring some additional support.

5. After years of funneling cash to investors through stock buybacks, big technology companies are reining in that spending as they race to sink more money into artificial intelligence. Last quarter, Alphabet Inc., Microsoft Corp., Amazon.com Inc., and Meta Platforms Inc. spent the least on combined share repurchases than in any quarter since 2019, according to data compiled by Bloomberg. Alphabet and Microsoft spent roughly $11 billion on buybacks, while Amazon and Meta held off entirely. Amazon hasn’t bought back stock since 2022. (Bloomberg)

Rising capital spending levels like the ones those companies have announced are going to tax free cash levels, so it should come as little surprise that buyback activity at those companies will be far smaller compared to prior years. The scaling back of those programs could make those stocks a bit more volatile than we’ve seen in the past, especially when it comes to their post-earnings reactions. We’ll be mindful of that as we focus on the drivers of their respective businesses and earnings.

6. Crypto prices may have been responding to policy news—there were tentative signs of progress on a digital asset bill known as the Clarity Act. The White House held a meeting on Thursday between groups representing crypto firms and banks. While the talks didn’t end in an agreement, they did yield some positive reactions. (Barron’s) Lawmakers are pushing toward a March 1 negotiation deadline set by the White House. If the bill clears, it would give institutions the clear legal definitions they have been waiting for before possibly entering spot markets in size. (Yahoo! Finance)

Members have asked us over the last several quarters if the Pro Portfolio would dip its toes into crypto. Our position has been that the regulatory uncertainty has been a barrier, but if and when that is sorted out, and a definitive structure is in place, we would consider it. With that in mind, we will continue to follow Clarity Act developments, full well knowing it’s entirely possible that the March 1 deadline slips. Should we opt to wade into the crypto market, not saying we will, more than likely it would be in the form of an ETF.

7. Economic data today per TipRanks: Personal Income & Spending (December), PCE Price Index (December), GDP (Q4 2025), S&P Flash Manufacturing & Services PMI (February), New Home Sales (November, December), Michigan Consumer Sentiment Index (Final, February).

8. Companies reporting today per TipRanks: Lamar Advertising  (LAMR) .

At the time of publication, TheStreet Pro Portfolio was long NVDA, GOOGL, AMZN, MSFT and META.