Stocks Decline Amid Trade War Fears and Economic Concerns

The S&P 500 Index ($SPX) (SPY) is down -1.94%, with the Dow Jones Industrial Average ($DOWI) (DIA) decreasing by -0.75% and the Nasdaq 100 Index ($IUXX) (QQQ) falling -3.18%. Additionally, March E-mini S&P futures (ESH25) are down -1.89%, while March E-mini Nasdaq futures (NQH25) have dipped -3.12%.

Stock indexes are experiencing a sell-off today, with both the S&P 500 and Nasdaq 100 reaching 5-1/2 month lows. This downward pressure is fueled by concerns that tariffs and reductions in the federal workforce will negatively impact consumer confidence and hinder economic growth. Comments from President Trump on a Sunday news program intensified these worries, as he remarked that the US economy is facing “a period of transition” due to his tariff policies. The losses among the Magnificent Seven stocks are also weighing heavily on the broader market.

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Concerns about US tariffs potentially igniting a global trade war that could diminish economic growth and corporate earnings are contributing to bearish sentiment in the markets. Just last Tuesday, President Trump introduced 25% tariffs on imports from Canada and Mexico, while elevating tariffs on Chinese goods from 10% to 20%. Though he did grant US automakers a one-month exemption from tariffs, as well as a similar reprieve for compliant Canadian and Mexican goods under the United States-Mexico-Canada Agreement (USMCA), he reiterated plans to impose reciprocal tariffs on foreign nations starting April 2.

Indicators of weakening demand in China’s economy have also negatively impacted prices and overall global growth prospects. China’s consumer price index (CPI) for February fell -0.7% year-over-year, which was below the anticipated -0.4% year-over-year and marked the largest decrease in 13 months. Furthermore, the producer price index (PPI) for January also disappointed, declining -2.2% year-over-year compared to expectations of -2.1% year-over-year.

The price of Bitcoin (^BTCUSD) has decreased over -7%, hitting a one-week low following disappointment over President Trump’s directive to establish a strategic Bitcoin reserve, which will initially comprise crypto forfeited to the government rather than new purchases.

Market focus will turn to Wednesday’s February US CPI report, which is expected to show a slight easing to +2.9% year-over-year, down from +3.0% year-over-year in January. Core CPI is projected to decrease to +3.2% year-over-year from +3.3% year-over-year last month. Additionally, upcoming US trade policies, including the 25% tariffs on steel and aluminum imports set to begin Wednesday, will also be in the spotlight. On Thursday, the final-demand PPI for February is expected to ease to +3.2% year-over-year from +3.5% year-over-year in January. On Friday, the University of Michigan’s March consumer sentiment index is anticipated to decrease by -1.2 to 63.5. Finally, the markets will monitor whether Congress can approve a spending bill to prevent a government shutdown ahead of the March 15 deadline.

Current market forecasts suggest a 4% probability for a -25 basis point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on March 18-19.

Overseas, stock markets displayed mixed results. The Euro Stoxx 50 is down -1.31%, China’s Shanghai Composite Index closed with a slight decline of -0.19%, while Japan’s Nikkei 225 rebounded from a 5-1/2 month low, increasing by +0.38%.

Interest Rates

June 10-year T-notes (ZNM25) have increased by +22 ticks, with the yield on 10-year T-notes down -8.4 basis points to 4.217%. Today’s trading reflects safe-haven demand for Treasury securities as equities weaken, along with support from stronger European government bonds. Nonetheless, T-note gains might be capped due to supply pressures, as the Treasury is scheduled to auction $119 billion in T-notes and T-bonds this week, starting with a $58 billion auction of 3-year T-notes on Tuesday.

European bond yields are mostly lower today. The 10-year German bund yield has decreased by -2.0 basis points to 2.816%, while the UK’s 10-year gilt yield has dropped by -1.5 basis points to 4.622%.

The Eurozone’s March Sentix investor confidence index rose by +9.8 points, reaching a 9-month high of -2.9, surpassing expectations of -9.3.

German industrial production in January increased by +2.0% month-over-month, exceeding forecasts of +1.5% month-over-month and marking the largest growth in five months. However, German trade data was mixed; while January exports unexpectedly dropped by -2.5% month-over-month, contrary to expectations of a +0.5% increase, imports rose by +1.2% month-over-month, outperforming forecasts.

Warnings from ECB Governing Council member Kazimir indicate the ECB must remain cautious as “inflation risks remain tilted to the upside.” In anticipation of the April 17 policy meeting, swaps suggest a 49% chance for a -25 basis point rate cut by the ECB.

US Stock Movers

The overall market weakness is predominantly driven by the underperformance of the Magnificent Seven stocks. Tesla (TSLA) leads the S&P 500 losers, decreasing over -8%. Nvidia (NVDA) is down by more than -4% in the Dow Jones Industrials, while Apple (AAPL), Alphabet (GOOGL), and Meta Platforms (META) also decline more than -4%. Moreover, Amazon.com (AMZN) has dropped over -3%, and Microsoft (MSFT) is down more than -2%.

Travel stocks and cruise line operators are also facing losses due to economic uncertainties. United Airlines Holdings (UAL) has fallen more than -8%, while Carnival (CCL) is down over -7%. Furthermore, Delta Air Lines (DAL) and Norwegian Cruise Line Holdings (NCLH) are off more than -6%, and Royal Caribbean Cruises Ltd (RCL) has decreased more than -5%.

Stocks associated with cryptocurrencies are declining as well, with Bitcoin’s price down more than -7% to a one-week low. Consequently, Coinbase Global (COIN), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) have dropped upwards of -5%.

Rocket Companies (RKT) experienced a sharp decline of more than -13% after agreeing to acquire Redfin in an all-stock transaction valued at $1.75 billion. Dexcom (DXCM) is down more than -6% following a warning letter from the FDA after inspections of its California and Arizona facilities. Emerson Electric (EMR) saw a decrease of more than -3% post-downgrade by Barclays from equal weight to underweight, with a new price target of $110.

ServiceNow (NOW) is down more than -7% after announcing its intention to acquire Moveworks for $2.85 billion. Host Hotels & Resorts (HST) is down more than -1% after Compass Point Research & Trading LLC lowered its rating from buy to neutral.

Defensive food and beverage stocks have seen gains amid broader market weakness. Archer-Daniels-Midland (ADM) is up more than +5%, leading gains in the S&P 500, along with Molson Coors Beverage (TAP), Conagra Brands (CAG), and the Campbell Company (CPB), all of which have more than +4% increases. PepsiCo (PEP), Hormel Foods (HRL), Kraft Heinz (KHC), General Mills (GIS), Monster Beverage (MNST), Mondelez International (MDLZ), and J M Smucker (SJM) are also up over +3%.

Defense stocks are performing well in anticipation of higher sales as European nations increase their defense budgets. Northrop Grumman (NOC) has increased by more than +4%, while Lockheed Martin (LMT) and Huntington Ingalls Industries (HII) have both risen more than +3%. General Dynamics (GD) is also up more than +2%.

Paycom Software (PAYC) is on the rise, gaining more than +4% following an upgrade from KeyBanc Capital Markets to overweight from sector weight, accompanied by a price target of $245.

Cognizant Technology Solutions (CTSH) saw a +3% uptick after the Wall Street Journal reported that Mantle Ridge has acquired a stake exceeding $1 billion in the company. Meanwhile, CME Group (CME) has risen over +2% after Raymond James upgraded the stock to outperform from market perform, setting a price target of $287.

Earnings Reports (3/10/2025)

Oracle Corp (ORCL), Seaport Entertainment Group Inc (SEG), Standardaero Inc (SARO), Vail Resorts Inc (MTN).

On the date of publication, Rich Asplund did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is provided only for informational purposes. For more details, please view the Barchart Disclosure Policy

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.