Tariff Worries Sink Stocks

The S&P 500 Index ($SPX) (SPY) Thursday closed down -1.39%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.30%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.89%.  March E-mini S&P futures (ESH25) are down -1.16%, and March E-mini Nasdaq futures (NQH25) are down -1.56%. 

Stock indexes plummeted Thursday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 falling to 6-month lows.  Signs of escalating trade tensions sparked a risk-off sentiment that hammered stock prices.  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.  Losses in stocks accelerated Thursday after President Trump said he would not repeal tariffs on steel and aluminum that took effect this week nor back off on plans for sweeping reciprocal tariffs set to start on April 2. 

Thursday’s US economic news is positive for stocks as it showed strength in the labor market and easing price pressures 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 on Thursday settled lower.  The Euro Stoxx 50 closed down -0.58%.  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) Thursday closed up +9.5 ticks.  The 10-year T-note yield fell -4.2 bp to 4.270%.  June T-notes Thursday recovered from a 1-week low and moved higher, and the 10-year T-note yield fell from a 2-week high of 4.351%.  T-notes recovered from early losses Thursday and moved higher after the slump in equities sparked safe-haven buying of T-notes. Thursday’s Fed-friendly Feb PPI report also supported T-notes after US producer prices rose less than expected.   

T-notes Thursday initially moved lower on concern an escalation of tariffs could boost price pressures after President Trump threatened to raise tariffs on EU alcohol products.  Also, weekly jobless claims unexpectedly fell, a hawkish factor for Fed policy.  In addition, weak demand for the Treasury’s  $22 billion 30-year T-bond auction was negative for T-notes as the auction had a bid-to-cover ratio of 2.37, below the 10-auction average of 2.43. 

European bond yields on Thursday moved lower.  The 10-year German bund yield fell -2.2 bp to 2.855%.  The 10-year UK gilt yield fell -4.5 bp to 4.677%.

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 50% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

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

Adobe (ADBE) closed down more than -13% 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. 

UiPath (PATH) closed down more than -15% after forecasting 2026 annualized recurring revenue of $1.82 billion, well below the consensus of $1.88 billion.

Trade Desk (TTD) closed down more than -10% after Cleveland Research downgraded the stock to neutral from buy. 

Intel (INTC) closed up more than +14% to lead gainers in the S&P 500 and Nasdaq 100 after naming Lip-Bu Tan as its next CEO, effective March 18. 

Defensive utility stocks rose on Thursday due to the slump in the overall market.   Exelon Corp (EXC) closed up more than +2%.  Also, Consolidated Edison (ED), American Electric Power Cos (AEP), Eversource Energy (ES), and FirstEnergy (FE) closed up more than +1%. 

SentinelOne (S) closed down more than -5% after forecasting 2026 revenue of $1.01 billion, weaker than the consensus of $1.03 billion. 

Paccar (PCAR) closed 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.

Moelis & Co (MC) closed down more than -2% after Morgan Stanley double-downgraded the stock to underweight from overweight with a price target of $70.

Dollar General (DG) closed up more than +6% after forecasting full-year comparable sales growth of 2.2%, above the consensus of 1.8%.

Mining stocks are climbing today, with gold prices rising to a record high and silver prices posting a 4-1/2 month high.  As a result, Newmont (NEM) closed up more than +4%, and Freeport McMoRan (FCX) and Southern Copper (SCCO) closed up more than +2%.

Alkami Technology (ALKT) closed up more than +4% after Stephens upgraded the stock to overweight from equal weight with a price target of $40.

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

Earnings Reports (3/14/2025)

AirSculpt Technologies Inc (AIRS), American Vanguard Corp (AVD), Arbutus Biopharma Corp (ABUS), Artiva Biotherapeutics Inc (ARTV), Bit Digital Inc (BTBT), Buckle Inc/The (BKE), Century Therapeutics Inc (IPSC), Contango ORE Inc (CTGO), Contango ORE Inc (CTGO), Despegar.com Corp (DESP), Emerald Holding Inc (EEX), Enliven Therapeutics Inc (ELVN), FutureFuel Corp (FF), Gogo Inc (GOGO), Golden Matrix Group Inc (GMGI), HF Foods Group Inc (HFFG), Larimar Therapeutics Inc (LRMR), Lightwave Logic Inc (LWLG), MRC Global Inc (MRC), Sana Biotechnology Inc (SANA), Shattuck Labs Inc (STTK), Terns Pharmaceuticals Inc (TERN), Vacasa Inc (VCSA), Value Line Inc (VALU), Verastem Inc (VSTM), WideOpenWest Inc (WOW), XBiotech Inc (XBIT).