Stocks Extend Monday's Gains as Trade Concerns Subside

The S&P 500 Index ($SPX) (SPY) today is up +0.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.10%.  June E-mini S&P futures (ESM25) are up +0.15%, and June E-mini Nasdaq futures (NQM25) are up +0.20%. 

Stock indexes are moderately higher today on carryover support from Monday's sharp gains in hopes that next week's upcoming US reciprocal tariffs would be more targeted than previously stated and narrower than initially planned, with Mr. Trump saying, "I may give a lot of countries breaks." Energy stocks are climbing today as WTI crude rose to a 3-week high after President Trump threatened to impose extra tariffs on nations buying crude from Venezuela. Stock gains are limited due to higher bond yields as the 10-year T-note yield rose to a 1-month high today. 

The US Jan S&P CoreLogic composite-20 home price index rose +4.67% y/y, below expectations of +4.80% y/y but the fastest pace of increase in 5 months.

Hawkish comments today from Fed Governor Kugler were bearish for stocks and bonds when she said she is "paying close attention to the acceleration of price increases and higher inflation expectations, especially given the recent bout of inflation in the past few years" and that she supports holding interest rates steady for "some time."

This week's attention will focus on today's reports on Feb new home sales (expected +3.5% m/m to 680,000) and the Conference Board's US Mar consumer confidence index (expected -4.7 to 93.6).  On Wednesday, the Feb capital goods new orders nondefense ex-aircraft and parts report is expected unchanged m/m.  On Thursday, Q4 GDP is expected to be unrevised at +2.3% (q/q annualized), and Mar pending home sales are expected +1.0% m/m.  On Friday, Feb personal spending is expected +0.5% m/m, and Feb personal income is expected +0.4% m/m.  Also, the Feb core PCE price index, the Fed's preferred inflation gauge, is expected +0.3% m/m and +2.7% y/y.  Finally, on Friday, the revised Mar University of Michigan consumer sentiment index is expected to remain unchanged at 57.9.

Heightened geopolitical risks in the Middle East are negative for stocks.  Israel continues its 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 continues to launch 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 three 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 March 8, Mr. Trump reiterated that he would impose reciprocal tariffs and additional sector-specific tariffs on foreign nations on April 2. 

The markets are discounting the chances at 16% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Overseas stock markets today are mostly higher.  The Euro Stoxx 50 is up +1.18%.  China's Shanghai Composite Index closed unchanged.  Japan's Nikkei Stock 225 closed up +0.46%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -2 ticks.  The 10-year T-note yield is up +0.2 bp to 4.337%.  June T-notes today dropped to a 1-month low, and the 10-year T-note yield rose to a 1-month high of 4.366%.  T-notes are weighed down by rising inflation expectations as the 10-year breakeven inflation rate today rose to a 3-week high of 2.374%.  Also, hawkish comments from Fed Governor Kugler undercut T-notes when she said she supports holding interest rates steady for "some time."  In addition, supply pressures are weighing on T-notes as the Treasury will auction $69 billion of 2-year T-notes later today as part of this week's $211 billion auction package of T-notes and floating-rate notes.   

European bond yields today are moving higher.  The 10-year German bund yield is up +5.7 bp to 2.828%.  The 10-year UK gilt yield rose to a 1-1/2 week high of 4.754% and is up +2.9 bp to 4.742%.

Eurozone Feb new car registrations fell -3.4% y/y to 854,000 units, the largest decline in 5 months.

The German Mar IFO business climate survey rose +1.4 to an 8-month high of 86.7, right on expectations.

ECB Governing Council member Kazimir said the ECB "is already now in the neutral rate zone," and he can't rule out a pause in interest rate cuts.

ECB Governing Council member Muller said he "can't rule out a pause in the ECB's rate cutting," and any further rate cuts will depend on the nature of the tariffs that the US is due to announce soon.

Swaps are discounting the chances at 65% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Energy producers and energy service providers are climbing today as the price of WTI crude rose to a 3-week high.  As a result, Occidental Petroleum (OXY) is up more than +2%, and Chevron (CVX) is up more than +1% to lead gainers in the Dow Jones Industrials.  Also, Devon Energy (DVN), Exxon Mobil (XOM), APA Corp (APA), Haliburton (HAL), Schlumberger (SLB), and Valerio Energy (VLO) are up more than +1%.

Crowdstrike Holdings (CRWD) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after BTIG LLC upgraded the stock to buy from neutral with a price target of $431.

International Paper (IP) is up more than +3% after forecasting 2025 total revenue of about $27 billion, better than the consensus of $24.6 billion.

Mobileye Global (MBLY) is up more than +4% after Volkswagen Group said it was working with the company to upgrade the advanced driver assistance systems in its upcoming new vehicles. 

Cloudflare (NET) is up more than +5% after Bank of America Global Securities double-upgraded the stock to buy from underperform with a price target of $160. 

Carvana (CVNA) is up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $280.

Trump Media and Technology Group (DJT) is up more than +11% after signing a non-binding agreement to partner with Crypto.com for a series of ETFs through its Truth.Fi brand. 

KB Home (KBH) is down more than -6% after reporting Q1 revenue of $1.39 billion, below the consensus of $1.50 billion, and cutting its full-year housing revenue estimate to $6.60 billion-$7.00 billion from a prior estimate of $7.00 billion-$7.50 billion, weaker than the consensus of $7.07 billion. 

UniFirst (UNF) is down more than -12% after Cintas terminated discussions to acquire the workplace uniform rental company. 

Crown Castle (CCI) is down more than -4% after unexpectedly terminating CEO Moskowitz and appointing CFO Schlanger as interim CEO effective immediately.

McCormick (MKC) is down more than -2% after reporting Q1 adjusted EPS of 60 cents, weaker than the consensus of 64 cents, and forecast full-year adjusted EPS of $3.03 to $3.08, the midpoint below the consensus of $3.07.   

American Electric Power (AEP) is down more than -1% after announcing pricing of an underwritten offering of about 19.6 million shares of common stock at $102 a share, below Monday's closing level of $104.18.

Earnings Reports (3/25/2025)

Core & Main Inc (CNM), Crown Holdings Inc (CCK), GameStop Corp (GME), McCormick & Co Inc/MD (MKC).