Economic Worries Hammer Stocks

The S&P 500 Index ($SPX) (SPY) today is down -1.53%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1.35%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.98%.  June E-mini S&P futures (ESM25) are down -1.59%, and June E-mini Nasdaq futures (NQM25) are down -2.02%. 

Stock indexes today are sinking on concern about the economic threat from US trade policies.  Today’s economic news showed weaker-than-expected household demand and signs of sticky inflation after US Feb personal spending rose less than expected and the Feb core PCE price index, the Fed's preferred inflation gauge, rose more than expected.

Losses in stock indexes accelerated today due to economic worries and rising inflation expectations after the University of Michigan March US consumer sentiment index was revised downward to a 2-1/3 year low, and the University of Michigan US Mar inflation expectations were revised higher. Today’s slump in Magnificent Seven stocks, chip makers, and travel stocks are leading losses in the broader market. 

Fed comments Thursday evening were also bearish for stocks after Boston Fed President Collins said that it looks "inevitable" that tariffs will boost inflation, at least in the near term.  Also, Richmond Fed President Barkin said rapid changes to US trade policy have created "a sense of instability" in the business community, and the associated decline in sentiment could "quiet demand."

US Feb personal spending rose +0.4% m/m, slightly weaker than expectations of +0.5% m/m.  Feb personal income rose +0.8% m/m, stronger than expectations of +0.4% m/m and the largest increase in 13 months.

The US Feb core PCE price index rose +0.4% m/m and +2.8% y/y, slightly stronger than expectations of +0.3% m/m and +2.7% y/y.

The University of Michigan US Mar consumer sentiment index was revised downward by -0.9 to a 2-1/3 year low of 57.0, weaker than expectations of no change at 57.9.

The University of Michigan US Mar 1-year inflation expectations were revised upward to a 2-1/3 year high of +5.0%, higher than expectations of +4.9%.  Also, the Mar 5-10 year inflation expectations were revised upward to a 32-year high of 4.1% y/y, stronger than expectations of 3.9%.

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.  On Wednesday, President Trump signed a proclamation to implement a 25% tariff on US auto imports, effective April 3.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  Mr. Trump said the tariffs were "permanent," and he was not interested in negotiating any exceptions.

The markets are discounting the chances at 18% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Overseas stock markets today are lower.  The Euro Stoxx 50 fell to a 2-week low and is down -1.12%.  China's Shanghai Composite Index closed down -0.67%.  Japan's Nikkei Stock 225 dropped to a 2-week low and closed down -1.80%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +19 ticks.  The 10-year T-note yield is down -8.1 bp to 4.278%.  June T-notes are climbing today on carryover support from a rally in 10-year German bunds to a 3-week high.  Also, there is some supply relief after the conclusion of this week’s Treasury auctions of $211 billion of T-notes and floating rate notes.  Gains in T-notes accelerated today after stocks retreated when the University of Michigan US Mar consumer sentiment index was revised downward to a 2-1/3 year low.

US economic news today was mixed for T-notes after Feb personal spending rose less than expected, but the Feb core PCE price index rose more than expected, and the University of Michigan US Mar inflation expectations were revised higher.

European bond yields today are moving lower.  The 10-year German bund yield fell to a 3-week low of 2.707% and is down -4.4 bp to 2.729%.  The 10-year UK gilt yield is down -7.8 bp to 4.705%.

The Eurozone Mar economic confidence index unexpectedly fell -1.1 to 95.2, weaker than expectations of an increase to 96.7.

The ECB's Feb 1-year inflation expectations were unchanged from Jan at 2.6%, stronger than expectations of 2.5%.

German Mar unemployment rose by +26,000, showing a weaker labor market than expectations of +10,000.  The Mar unemployment rate unexpectedly rose +0.1 to a 4-1/2 year high of 6.3%, showing a weaker labor market than expectations of no change at 6.2%.

Swaps are discounting the chances at 85% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The slump in the Magnificent Seven stocks today is a bearish factor for the overall market.  Tesla (TSLA) and Amazon.com (AMZN) are down more than -3%.  Also, Alphabet (GOOGL), Microsoft (MSFT), and Meta Platforms (META) are down more than -2%.  In addition, Apple (AAPL) and Nvidia (NVDA) are down more than -1%.

Chip makers are falling today and are weighing on the broader market. Marvell Technology (MRVL) and ON Semiconductor (ON) are down more than 4%, and GlobalFoundries (GFS), KLA Corp (KLAC), and Micron Technology (MU) are down more than -3%.  Also, NXP Semiconductors NV (NXPI), Microchip Technology (MCHP), Advanced Micro Devices (AMD), Lam Research (LRCX), Broadcom (AVGO), and Qualcomm (QCOM) are down more than -2%.

Lululemon Athletica (LULU) is down more than -15% to lead losers in the S&P 500 and Nasdaq 100 after forecasting 2026 net revenue of $11.15 billion to $11.30 billion, weaker than the consensus of $11.31 billion. 

Economic concerns are undercutting travel and hotel stocks today. Delta Air Lines (DAL), Royal Caribbean Cruises Ltd (RCL), and United Airlines Holdings (UAL) are down more than -4%.  Also, MGM Resorts International (MGM), Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Wynn Resorts Ltd (WYNN) are down more than -3%.  In addition, Booking Holdings (BKNG), Las Vegas Sands (LVS), and Hilton Worldwide Holdings (HLT) are down more than -2%.

Oxford Industries (OXM) is down more than -4% after forecasting Q1 adjusted EPS of $1.70 to $1.90, well below the consensus of $2.73. 

Leidos Holdings (LDOS) and Oracle (ORCL) are down more than -1% after the US Department of Defense said it would terminate a plan to use both companies' software to manage its civilian workforce as part of the Pentagon's cost-cutting efforts. 

WR Berkley (WRB) is up more than +8% to lead gainers in the S&P 500 after Mitsui Sumitomo Insurance agreed to buy 15% of the company's outstanding shares.

AppLovin (APP) is up more than +3% to lead gainers in the Nasdaq 100 after Loop Capital Markets said the stock remains a top pick and would be "aggressive buyers" on weakness. 

Rocket Lab USA (RKLB) is up more than +2% after it was selected by the US Space Force for a $5.6 billion program. 

AngloGold Ashanti Plc (AU) is up more than +2% to lead gold mining stocks higher as the price of gold climbed to a new record high. 

US Steel (X) is up more than +1% after Semafor reported that the company is still in talks with Nippon Steel about a deal to preserve their proposed merger.

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).