Stocks Supported by Strength in Chip Stocks and Lower Bond Yields

The S&P 500 Index ($SPX) (SPY) today is up +0.48%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.41%.  March E-mini S&P futures (ESH25) are up +0.51%, and March E-mini Nasdaq futures (NQH25) are up +0.44%. 

Stock indexes today are moderately higher on strength in chip stocks and lower T-note yields.  Stocks also received support on relief that today’s report on US Feb retail sales ex-autos rose as expected, easing concern that the recent plunge in consumer confidence would undercut consumer spending.

Stock index futures today initially posted overnight losses after Treasury Secretary Bessent said on Sunday that he's not worried about the recent slump in stocks and that corrections are "healthy " and "normal," dampening speculation the administration will step in to boost markets in some way. 

US Feb retail sales rose +0.2% m/m, weaker than expectations of +0.6% m/m, although Feb retail sales ex-autos rose +0.3% m/m, right on expectations.

The US Mar Empire manufacturing survey of general business conditions index fell -25.7 to a 14-month low of -20.0, weaker than expectations of -1.9.

Global equity markets garnered support today on carryover from a rally in Chinese stocks to a 3-month high on better-than-expected economic news, a supportive factor for global growth.  China Feb industrial production rose +5.9% year-to-date, stronger than expectations of +5.3% year-to-date.  Also, China Feb retail sales rose +4.0% year-to-date, stronger than expectations of +3.8% year-to-date.  However, China’s property market remains a drag on the economy after China Feb new home prices fell -0.14% m/m, the twenty-first consecutive month that home prices have fallen.

Geopolitical risks are also undercutting stocks as the US launched weekend strikes on Yemen's Houthi rebels.  US Defense Secretary Hegseth said strikes would be "unrelenting" until the group stops attacking vessels in the Red Sea.  The Houthi rebels said they would respond by attacking US vessels in the Red Sea. 

Stocks have been under pressure over the past two weeks due to fears that US tariffs will weaken economic growth and corporate earnings.  On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  On Sunday, Mr. Trump reiterated that he would impose reciprocal tariffs and additional sector-specific tariffs on foreign nations on April 2. 

Market attention this week will focus on Tuesday’s reports on Feb housing starts (expected +1.1% m/m to 1.281 million) and Feb building permits (expected -1.6% m/m to 1.45 million), the Feb manufacturing production report (expected +0.3% m/m), and the Tue-Wed FOMC meeting (expected no change to the 4.25%-4.50% federal funds target range).  The markets will also look to the Fed’s economic projections and dot-plot for the future path of interest rates, along with post-meeting comments from Fed Chair Powell.

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 higher.  The Euro Stoxx 50 is up +0.44%.  China’s Shanghai Composite Index climbed to a 3-month high and closed up +0.19%.  Japan’s Nikkei Stock 225 rose to a 1-week high and closed up +0.93%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +2 ticks.  The 10-year T-note yield is down -2.7 bp to 4.285%.  June T-notes today are slightly higher on carryover support from a rally in 10-year German bunds.  Also, the escalation of geopolitical risks has boosted safe-haven demand for T-notes after the US launched attacks on Houthi rebels in Yemen.  T-notes maintained their gains after today’s US economic news showed Feb retail sales rose less than expected, and the Mar Empire manufacturing survey of general business conditions index fell to a 14-month low, dovish factors for Fed policy. 

European bond yields today are moving lower.  The 10-year German bund yield is down -6.7 bp to 2.808%.  The 10-year UK gilt yield is down -1.7 bp to 4.648%.

ECB Vice President Guindos said he sees service inflation moderating and moving toward lower levels.

Swaps are discounting the chances at 53% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The strength in chip stocks today is supportive of the overall market.  Advanced Micro Devices (AMD) is up more than +4%.  Also, ARM Holdings Plc (ARM), Microchip Technology (MCHP), and GlobalFoundries (GFS) are up more than +2%.  In addition, Marvell Technology (MRVL) and Micron Technology (MU) are up more than +1%.  

Intel (INTC) is up more than +4% to lead gainers in the Nasdaq 100 after Reuters reported that incoming CEO Lip-Bu Tan is considering significant changes to its chip manufacturing methods and AI strategies, including staff cuts to address the middle management layer. 

Tesla (TSLA) is down more than -3% after Chinese rival BYD Co. unveiled a new system for electric cars that can charge a vehicle in five minutes.

Science Applications International Corp (SAIC) is up more than +12% after reporting Q4 adjusted EPS of $2.04, stronger than the consensus of $1.65. 

Netflix (NFLX) is up more than +3% after MoffettNathanson upgraded the stock to buy from neutral with a price target of $1,100.

Nike (NKE) is up more than +2% to lead gainers in the Dow Jones Industrials after TD Cowen raised its price target on the stock to $75 from $68.

Norwegian Cruise Line Holdings (NCLH) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $30.   

Sprouts Farmers Market (SFM) is up more than +1% after Deutsche Bank upgraded the stock to buy from hold with a price target of $190. 

Monday.com Ltd (MNDY) is up more than +2% after D.A. Davidson upgraded the stock to buy from neutral with a price target of $350. 

Affirm Holdings (AFRM) is down more than -12% after CNBC reported that rival company Klarna is set to displace it as the exclusive provider of buy now, pay later loans for Walmart.  

Incyte (INCY) is down more than -10% to lead losers in the S&P 500 after its initial data from a late-stage trial of its povorcitinib to treat a skin condition known as hidradenitis suppurativa failed to meet analyst expectations.

CION Investment Corp (CION) is down more than -2% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $10. 

Earnings Reports (3/17/2025)

Altus Power Inc (AMPS), Alumis Inc (ALMS), Bicara Therapeutics Inc (BCAX), BioAge Labs Inc (BIOA), CAMP4 Therapeutics Corp (CAMP), Consolidated Water Co Ltd (CWCO), Diversified Energy Co PLC (DEC), Eastman Kodak Co (KODK), Energy Vault Holdings Inc (NRGV), Getty Images Holdings Inc (GETY), Hallador Energy Co (HNRG), Harrow Inc (HROW), Inhibrx Biosciences Inc (INBX), Inspired Entertainment Inc (INSE), MBX Biosciences Inc (MBX), Natural Gas Services Group Inc (NGS), Open Lending Corp (LPRO), Quanterix Corp (QTRX), Science Applications International Corp (SAIC), Septerna Inc (SEPN), Sonida Senior Living Inc (SNDA), T1 Energy Inc (TE), Townsquare Media Inc (TSQ).