The S&P 500 Index ($SPX) (SPY) Thursday closed down -0.33%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.59%. June E-mini S&P futures (ESM25) are down -0.32%, and June E-mini Nasdaq futures (NQM25) are down -0.61%.
Stock indexes on Thursday partially recovered from early losses and settled mixed. Stocks were under pressure Thursday after President Trump pushed ahead with additional tariffs that threaten to derail economic growth and boost inflation. Late Wednesday, President Trump signed a proclamation to implement a 25% tariff on US auto imports, effective April 3, and said further tariffs would be imposed on the European Union and Canada if they worked together “to do economic harm” to the US. The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside of the US. Mr. Trump said the tariffs were “permanent,” and he was not interested in negotiating any exceptions.
However, stocks recovered from their worst level Thursday after some megacap technology stocks rebounded, and US economic news showed strength, tempering concerns about US trade policies. Apple closed up more than +1%, and Tesla closed up +0.39% to lead megacap technology stocks higher. Meanwhile, the US Q4 GDP was revised higher, weekly US initial unemployment claims unexpectedly declined, and Feb pending home sales rose more than expected.
US Q4 GDP was revised slightly higher by +0.1 point to +2.4% (q/q annualized), stronger than expectations of no change at +2.3%. Q4 personal consumption was revised downward to +4.0% from the previously reported +4.2%, and the Q4 core price index was revised lower to +2.6% from the previously reported +2.7%.
US weekly initial unemployment claims unexpectedly fell -1,000 to 224,000, showing a stronger labor market than expectations of an increase to 225,000.
US Feb pending home sales rose +2.0% m/m, stronger than expectations of +1.0% m/m.
Market attention will focus on Friday’s Feb personal spending report (expected +0.5% m/m) and Feb personal income (expected +0.4% m/m). Also, the Feb core PCE price index, the Fed’s preferred inflation gauge, is expected to rise +0.3% m/m and +2.7% y/y. Finally, on Friday, the revised March University of Michigan US 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. Israel also deployed troops in Syria as part of its new defense doctrine. Also, the US continues to launch strikes on Yemen’s Houthi rebels. US Defense Secretary Hegseth recently 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 Thursday settled mixed. The Euro Stoxx 50 fell to a 1-1/2 week low and closed down -0.57%. China’s Shanghai Composite Index closed up +0.15%. Japan’s Nikkei Stock 225 fell to a 1-1/2 week low and closed down -0.60%.
Interest Rates
June 10-year T-notes (ZNM25) Thursday closed down -4.5 ticks. The 10-year T-note yield rose +1.9 bp to 4.371%. June T-notes Thursday dropped to a 1-month low, and the 10-year T-note yield rose to a 1-month high of 4.398%. T-notes retreated Thursday after President Trump imposed 25% tariffs on US auto imports, which threatens to boost inflation. Also, rising inflation expectations are bearish for T-notes as the 10-year breakeven inflation rate Thursday rose to a 1-month high of 2.405%. T-notes recovered from their worst levels after the US Q4 core price index was revised lower to +2.6% from the previously reported +2.7%. T-notes also garnered support from decent demand for the Treasury’s $44 billion 7-year T-note auction that had a bid-to-cover ratio of 2.53, right on the 10-auction average.
European bond yields on Thursday were mixed. The 10-year German bund yield fell to a 3-week low of 2.743% and finished down -2.2 bp to 2.773%. The 10-year UK gilt yield rose to a 1-1/2 month high of 4.809% and finished up +5.5 bp to 4.783%.
Eurozone Feb M4 money supply rose +4.0% y/y, stronger than expectations of +3.8% y/y and the fastest pace of increase in 2-1/4 years.
ECB Governing Council member Wunsch said the ECB should consider holding interest rates steady at its next meeting due to US trade policy complications.
Swaps are discounting the chances at 75% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
US Stock Movers
US automakers and auto part manufacturers retreated Thursday after President Trump imposed 25% tariffs on US auto imports starting next week. As a result, General Motors (GM) closed down more than -7% to lead losers in the S&P 500. Also, BorgWarner (BWA) closed down more than -4%, and Autoliv (ALV) and Ford Motor (F) closed down more than -3%. In addition, Stellantis NV (STLA) closed down nearly -1%.
Tesla (TSLA) bucked the auto trend and closed up +0.39%.
Chip makers fell Thursday and weighed on the broader market. Advanced Micro Devices (AMD) closed down more than -3% after Jeffries downgraded the stock to hold from buy. Also, Broadcom (AVGO) closed down more than -3%, and Nvidia (NVDA), ON Semiconductor (ON), NXP Semiconductors NV (NXPI), Marvell Technology (MRVL), ARM Holdings Plc (ARM), Texas Instruments (TXN), and Microchip Technology (MCHP) closed down more than -2%.
Auto parts stores and used car retailers rallied Thursday on speculation the new 25% tariff on US auto imports will prompt consumers to keep and maintain used cars instead of purchasing a new model. As a result, AutoZone (AZO) is up more than +4%, and O’Reilly Automotive (ORLY) closed up more than +3% to lead gainers in the Nasdaq 100. Also, CarMax (KMX) closed up more than +2%.
Rental car companies surged Thursday as the 25% tariffs on US auto imports are seen as boosting used car prices and is positive for the rental companies, which eventually sell used vehicles from their fleets. As a result, Hertz Global Holdings (HTZ) closed up more than +22%, and Avis Budget Group (CAR) closed up more than +20%.
Defensive food producers and beverage makers moved higher Thursday due to weakness in the broader market. Archer-Daniels-Midland (ADM), Hormel Foods (HRL), and Conagra Brands (CAG) closed up more than +2%. Also, General Mills (GIS), Mondelez International (MDLZ), Kraft Heinz (KHC), JM Smucker (SJM), Tyson Foods (TSN), Hershey (HSY), and Coca-Cola (KO) closed up more than +1%.
AppLovin (APP) closed down more than -20% to lead losers in the Nasdaq 100 after Muddy Waters Research said it was short the stock.
Verint Systems (VRNT) closed down more than -13% after reporting Q4 adjusted EPS of 99 cents, weaker than the consensus of $1.27.
Jeffries Financial Group (JEF) closed down more than -9% after reporting Q1 net revenue of $1.59 billion, well below the consensus of $1.86 billion.
Phillips 66 (PSX) closed down more than -1% after Goldman Sachs downgraded the stock to neutral from buy.
Soleno Therapeutics (SLNO) closed up more than +37% after the FDA approved its Vykat extended-release tablets for treating hyperphagia with Prader-Willi syndrome.
Dollar Tree (DLTR) closed up more than +11% to lead gainers in the S&P 500 and added to Wednesday’s +3% advance after selling its Family Dollar chain to Brigade Capital Management and Macellum Capital Management for about $1 billion.
Angi Inc (ANGI) closed up more than +3% after S&P Dow Jones Indices said the stock will replace ODP Corp in the S&P SmallCap 600 before the start of trading on Wednesday, April 2.
Cava Group (CAVA) closed up more than +2% after S&P Dow Jones Indices said the stock will replace Altair Engineering in the S&P MidCap 400 before the start of trading on Monday, March 31.
Northrop Grumman (NOC) closed up more than +1% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $575.
Earnings Reports (3/28/2025)
Acrivon Therapeutics Inc (ACRV), Actinium Pharmaceuticals Inc (ATNM), American Vanguard Corp (AVD), Biomea Fusion Inc (BMEA), Cadiz Inc (CDZI), Critical Metals Corp (CRML), Despegar.com Corp (DESP), Empire Petroleum Corp (EP), FutureFuel Corp (FF), Galectin Therapeutics Inc (GALT), Golden Matrix Group Inc (GMGI), Harrow Inc (HROW), Humacyte Inc (HUMA), Kodiak Sciences Inc (KOD), Maui Land & Pineapple Co Inc (MLP), Stratus Properties Inc (STRS), Taylor Devices Inc (TAYD), Verde Clean Fuels Inc (VGAS), Zspace Inc (ZSPC).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
