Stocks Pressured on Ramped-up Tariff Rhetoric

The S&P 500 Index ($SPX) (SPY) today is down -0.33%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.68%.  March E-mini S&P futures (ESH25) are down -0.42%, and March E-mini Nasdaq futures (NQH25) are down -0.62%. 

Stock indexes today are moderately lower as the escalation of trade tensions sparks a risk-off sentiment in asset markets.  President Trump threatened to enact a 200% tariff on European wine, champagne, and other alcoholic beverages if the EU doesn't repeal a tax on US whiskey.  Stock index futures recovered from their worst levels after weekly US jobless claims unexpectedly declined and US Feb producer prices rose less than expected.

US weekly initial unemployment claims unexpectedly fell -2,000 to 220,000, showing a stronger labor market than expectations of an increase to 225,000.

US Feb PPI final demand was unchanged m/m and rose +3.2% y/y, weaker than expectations of +0.3% m/m and +3.3% y/y.  Also, the Feb PPI ex-food and energy report of -0.1% m/m and +3.4% y/y was weaker than expectations of +0.3% m/m and +3.5% y/y. 

Stocks have been under pressure over the past week due to fears that US tariffs will weaken economic growth and corporate earnings.  Last Tuesday, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  Mr. Trump also reiterated that he would impose reciprocal tariffs on foreign nations on April 2, as planned.  Trade tensions escalated on Wednesday when the European Union imposed tariffs on up to $28.3 billion of US goods, including soybeans, beef, and poultry, in retaliation for US tariffs on steel and aluminum imports.  Also, Canada announced 25% counter-tariffs on about $20.8 billion of US-made items, such as computers and sporting goods, along with US steel and aluminum products.

Market attention for the rest of this week will focus on US trade policies.  Also, on Friday, the University of Michigan's March consumer sentiment index is expected to fall -1.2 to 63.5.  Finally, the markets will also see if Congress can approve a spending bill to avert a government shutdown ahead of a March 15 deadline.

The markets are discounting the chances at 1% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are lower.  The Euro Stoxx 50 is down -0.29%.  China's Shanghai Composite Index closed down -0.39%.  Japan's Nikkei Stock 225 closed down -0.08%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -5 ticks.  The 10-year T-note yield is up +2.3 bp to 4.335%.  June T-notes today fell to a 1-week low and are moderately lower, and the 10-year T-note yield rose to a 2-week high of 4.345%.  T-note prices are under pressure due to negative carryover from weakness in European government bonds.  Also, supply pressures are weighing on T-notes as the Treasury will auction $22 billion 30-year T-bonds later today to conclude this week's $119 billion T-notes and T-bonds auction package.  Today's US economic news was mixed for T-notes as weekly jobless claims unexpectedly fell, but Feb PPI rose less than expected. 

European bond yields today are moving higher.  The 10-year German bund yield is up +0.9 bp to 2.886%.  The 10-year UK gilt yield is up +2.3 bp to 4.745%.

Eurozone Jan industrial production rose +0.8% m/m, stronger than expectations of +0.6% m/m and the largest increase in 5 months. 

ECB Governing Council member and Bundesbank President Nagel said, "We will achieve price stability this year," and Eurozone inflation will return to the ECB's 2% target by the end of 2025.

Swaps are discounting the chances at 47% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The weakness in Magnificent Seven stocks is weighing on the overall market.  Tesla (TSLA) is down more than -4%.  Also, Meta Platforms (META) is down more than -3%, and Alphabet (GOOGL) and Amazon.com (AMZN) are down more than -2%.  In addition, Apple (AAPL) and Nivida (NVDA) are down more than -1%, and Microsoft (MSFT) is down -0.77%.

Adobe (ADBE) is down more than -10% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q2 adjusted EPS of $4.95-$5.00, weaker than the consensus of $5.00. 

Intel (INTC) is up more than +15% to lead gainers in the S&P 500 and Nasdaq 100 after naming Lip-Bu Tan as its next CEO, effective March 18. 

The strength in chip stocks is a supportive factor for the broader market.  Microchip Technology (MCHP), Marvell Technology (MRVL), Applied Materials (AMAT), Micron Technology (MU), ON Semiconductor Corp (ON), GlobalFoundries (GFS), and NXP Semiconductors NV (NXPI) are up more than +1%. 

UiPath (PATH) is down more than -17% after forecasting 2026 annualized recurring revenue of $1.82 billion, well below the consensus of $1.88 billion.

SentinelOne (S) is down more than -4% after forecasting 2026 revenue of $1.01 billion, weaker than the consensus of $1.03 billion. 

Paccar (PCAR) is down more than -3% after the new head of the EPA announced potential rollbacks of truck emissions regulations starting in 2027, which could derail an expected upgrade to earnings driven by new truck purchases.

Trade Desk (TTD) is down more than -3% after Cleveland Research downgraded the stock to neutral from buy. 

Moelis & Co (MC) is down more than -1% after Morgan Stanley double-downgraded the stock to underweight from overweight with a price target of $70.

Dollar General (DG) is up more than +3% after forecasting full-year comparable sales growth of 2.2%, above the consensus of 1.8%.

IonQ Inc (IONQ) is up more than +1% on signs of insider buying after an SEC filing showed director Scannell bought $2.03 million of shares on Wednesday.

Alkami Technology (ALKT) is up more than +1% after Stephens upgraded the stock to overweight from equal weight with a price target of $40.

FMC Corp (FMC) is up more than +1% after Goldman Sachs reinstated coverage on the stock with a buy recommendation and a price target of $51. 

Earnings Reports (3/13/2025)

DocuSign Inc (DOCU), Dollar General Corp (DG), Ulta Beauty Inc (ULTA), Williams-Sonoma Inc (WSM).