Stocks Retreat on Weakness in Technology Stocks

The S&P 500 Index ($SPX) (SPY) today is down -1.15%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.89%.  March E-mini S&P futures (ESH25) are down -1.29%, and March E-mini Nasdaq futures (NQH25) are down -2.04%. 

Stock indexes today are trading lower ahead of the 2-day FOMC meeting that began today.  Stocks are being undercut by concerns that the US economy is losing momentum due to US trade policies.  Weakness in the Magnificent Seven stocks and a slide in chip stocks are leading technology stocks and the broader market lower.

Stocks remained under pressure today despite better-than-expected US economic news on Feb housing starts, building permits, and Feb manufacturing production.

US Feb housing starts rose +11.2% m/m to 1.501 million, stronger than expectations of 1.385 million.  Feb building permits, a proxy for future construction, fell -1.2% m/m to 1.456 million, a smaller decline than expectations of 1.453 million. 

The US Feb import price index ex-petroleum rose +0.4% m/m, stronger than expectations of +0.2% m/m. 

US Feb manufacturing production rose +0.9% m/m, stronger than expectations of +0.3% m/m and the biggest increase in a year.

Geopolitical risks in the Middle East are also undercutting stocks. Israel today launched a series of airstrikes across Gaza, ending a two-month ceasefire with Hamas, and Israeli Prime Minister Netanyahu vowed to act “with increasing military strength” to free hostages and disarm Hamas.  Also, 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. 

According to the latest survey from Bank of America, investors cut their US stock holdings by 40 percentage points from the previous survey, the most on record, from 17% overweight in February to 23% underweight in March, while cash levels have risen to 4.1% from 3.5%, the biggest jump since 2020.

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 the Tue-Wed FOMC meeting (expected no change to the 4.25%-4.50% federal funds target range). The markets will also look at 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 Tue-Wed FOMC meeting.

Overseas stock markets today are higher.  The Euro Stoxx 50 climbed to a 1-week high and is up +0.58%.  China’s Shanghai Composite Index rose to a 3-month high and closed up +0.11%.  Japan’s Nikkei Stock 225 rallied to a 2-1/2 week high and closed up +1.20%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -1 tick.  The 10-year T-note yield is up +1.2 bp to 4.310%.  June T-notes today are under pressure after US Feb housing starts and building permits rose more than expected.  Also, the Feb import price index ex-petroleum rose more than expected, a hawkish factor for Fed policy.  In addition, supply pressures are undercutting T-note prices as the Treasury will auction $13 billion 20-year T-bonds later today.  T-notes recovered most of their losses today as stocks retreated, which fueled safe-haven buying of T-notes.

European bond yields today are moving higher.  The 10-year German bund yield is up +1.3 bp to 2.831%.  The 10-year UK gilt yield is up +3.0 bp to 4.667%.

The German Mar ZEW survey expectations of economic growth rose +25.6 to a 3-year high of 51.6, stronger than expectations of 48.3.

Swaps are discounting the chances at 55% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Chip stocks are sliding today, another bearish factor for the overall market.  ARM Holdings Plc (ARM) and Marvell Technology (MRVL) are down more than -2%.  Also, Micron Technology (MU), GlobalFoundries (GFS), KLA Corp (KLAC), Lam Research (LRCX), and Microchip Technology (MCHP) are down more than -1%.  

The weakness of the Magnificent Seven stocks today is weighing on the overall market.  Tesla (TSLA) is down more than -5% after RBC Capital Markets cut its price target on the stock to $330 from $440.  Also, Meta Platforms (META) is down more than -4%, and Alphabet (GOOGL) is down more than -3%.  In addition, Nvidia (NVDA) is down more than -3% to lead losers in the Dow Jones Industrials, and Amazon.com (AMZN) is down more than -2%.  Finally, Microsoft (MSFT) is down more than -1%. 

Economic concerns are weighing on travel stocks today.  Royal Caribbean Cruises Ltd (RCL) is down more than -6% to lead losers in the S&P 500.  Also, Norwegian Cruise Line Holdings (NCLH) and Carnival (CCL) are down more than -4%.  In addition, United Airlines Holdings (UAL) and Delta Air Lines (DAL) are down more than -3%, and Booking Holdings (BKNG), Hilton Worldwide Holdings (HLT) and Marriott International (MAR) are down more than -2%.

Bakkt Holdings (BKKT) is down more than -35% after Bank of America and Webull Pay announced that they will not renew their commercial agreements with the company. 

Sarepta Therapeutics (SRPT) is down more than -23% ahead of presentations of two-year data from a late-stage trial of its treatment for Duchenne muscular dystrophy this week.

Incyte (INCY) is down more than -2% after Guggenheim Securities downgraded the stock to neutral from buy. 

Broadcom (AVGO) is down more than -2% after The Information reported that Google plans to work with Broadcom rival MediaTek to help design and produce some of its artificial intelligence chips.   

MicroStrategy (MSTR) is down more than -2% after announcing plans to sell $500 million of dollar-denominated perpetual preferred stock.

 

Entergy (ETR) is down more than -2% after offering $1.3 billion of shares of its common stock via Morgan Stanley, Bank of America Securities, JPMorgan Chase, and Mizuho Securities.

Defensive healthcare stocks are moving higher today due to the slump in the broader market.  CVS Health Corp (CVS), Humana (HUM), UnitedHealth Group (UNH), and Elevance Health (ELV) are up more than +1%. 

AngloGold (AU) is up more than +3% to lead mining stocks higher today as the price of gold rose to a new record high. 

Willis Towers Watson Plc (WTW) is up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $395.

Intel (INTC) closed up more than +1%, adding to Monday’s +6% jump to lead gainers in the Nasdaq 100 after incoming CEO Lip-Bu Tan said he is considering significant changes to its chip manufacturing methods and AI strategies, including staff cuts to address the middle management layer. 

EQT Corp (EQT) is up more than +1% after Stephens upgraded the stock to overweight from equal weight with a price target of $59. 

Earnings Reports (3/18/2025)

Absci Corp (ABSI), Adverum Biotechnologies Inc (ADVM), Akoya Biosciences Inc (AKYA), Citi Trends Inc (CTRN), Golden Matrix Group Inc (GMGI), HealthEquity Inc (HQY), Inovio Pharmaceuticals Inc (INO), Maravai LifeSciences Holdings (MRVI), Neurogene Inc (NGNE), OmniAb Inc (OABI), Sandisk Corp/DE (SNDK), StoneCo Ltd (STNE), Trevi Therapeutics Inc (TRVI), Waldencast Plc (WALD).