Stocks Surge as Tariff Announcements Calm Market Fears
The S&P 500 Index ($SPX) (SPY) climbed +1.45% today, while the Dow Jones Industrials Index ($DOWI) (DIA) rose +1.16%. The Nasdaq 100 Index ($IUXX) (QQQ) increased by +1.74%. Additionally, June E-mini S&P futures (ESM25) are up +1.48%, and June E-mini Nasdaq futures (NQM25) are seeing a +1.83% boost.
Stock indexes are trending upward today, with the S&P 500, Dow Jones Industrials, and Nasdaq 100 all reaching two-week highs. This rally is fueled by reports indicating that forthcoming U.S. reciprocal tariffs will be more precise and narrower than previously anticipated. Select countries could be exempt from these tariffs, and existing tariffs on steel and metals may not be cumulative. President Trump is set to announce a “Liberation Day” tariff framework on April 2, which is expected to expand reciprocal tariffs while avoiding the broad global tariffs that had initially been feared, easing concerns regarding the implications for global trade and economic growth.
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Market strength is being driven by the so-called Magnificent Seven stocks and a notable uptick in chip stocks. Furthermore, increased M&A activity is also supporting stock prices, following James Hardie Industries’ decision to acquire Azek Co for $8.75 billion in cash. Similarly, Clearlake Capital Group has agreed to purchase Dun & Bradstreet Holdings for approximately $4.1 billion.
Upcoming Economic Reports
Attention is squarely focused on key economic reports this week. On Tuesday, new home sales data for February is expected to show a +3.5% month-over-month increase, reaching 680,000 units. The Conference Board will release its consumer confidence index for March, with a forecasted decline of 4.7 points to a total of 93.6. On Wednesday, the capital goods new orders report (non-defense, excluding aircraft and parts) is expected to remain unchanged.
Looking ahead to Thursday, the fourth quarter GDP is anticipated to stay at +2.3% (quarter-over-quarter annualized), while March pending home sales are expected to rise by +1.0% month-over-month. Finally, on Friday, personal spending for February is projected to increase by +0.5% month-over-month, accompanied by an expected +0.4% rise in personal income. The February core PCE price index, the Fed’s preferred inflation measure, is expected to show a +0.3% increase month-over-month and +2.7% year-over-year. Additionally, the revised consumer sentiment index from the University of Michigan for March is anticipated to remain steady at 57.9.
Geopolitical Concerns
Despite today’s market performance, heightened geopolitical tensions in the Middle East pose downside risks for stocks. Israel has resumed airstrikes against Gaza, re-engaging in conflict with Hamas, and Prime Minister Netanyahu has pledged to escalate military actions to secure the safe return of hostages. The U.S. has also intensified military operations against the Houthi rebels in Yemen, with Defense Secretary Hegseth stating that operations would continue until the group ceases attacks on vessels in the Red Sea, while Houthi rebels have threatened retaliation against U.S. vessels.
Over the last three weeks, stocks have been pressured due to anxieties around U.S. tariffs potentially undermining economic growth and corporate earnings. These concerns were amplified when President Trump announced a 25% tariff on Canadian and Mexican goods and increased tariffs on Chinese products from 10% to 20% on March 4. His reiteration of imposing reciprocal tariffs on foreign nations by April 2 only added to market stress.
Market analysts are currently predicting an 18% likelihood of a -25 basis point rate cut during the Federal Open Market Committee (FOMC) meeting on May 6-7.
Global Market Overview
Overseas stock markets exhibit mixed performances today. The Euro Stoxx 50 has dipped by -0.32%. Meanwhile, China’s Shanghai Composite Index rebounded from a one-and-a-half-week low to close up +0.15%. Japan’s Nikkei 225 ended the day down by -0.18%.
Interest Rates Update
June 10-year T-notes (ZNM25) fell by -10 ticks today, raising the 10-year T-note yield to +4.298%, an increase of +5.2 basis points. The pressure on T-notes is attributed to the expectation that President Trump’s upcoming tariffs will be more focused than previously thought, which alleviates inflation fears. In addition, today’s significant stock rally has reduced the appeal of T-notes as a safe-haven investment.
European bond yields showed mixed results today, with the 10-year German bund yield rising by +2.3 basis points to 2.788%. Conversely, the 10-year UK gilt yield dropped slightly by -0.8 basis points to 4.704% after reaching a one-week high of 4.742%.
The Eurozone’s March S&P Manufacturing PMI surprised on the upside, increasing by +1.1 to a two-year high of 48.7, surpassing expectations of 48.2. In contrast, the UK’s March PMI unexpectedly fell by -1.7 to 44.6, marking the steepest contraction in 18 months.
ECB Executive Board member Cipollone noted that the central bank’s case for continued interest rate cuts has strengthened since their last meeting earlier this month. Market swaps are projecting a 63% chance of a -25 basis point rate cut by the ECB at the April 17 policy meeting.
Key U.S. Stock Movers
The Magnificent Seven stocks have stood out today, propelling the market higher. Tesla (TSLA) surged more than +7%, leading the gainers in the S&P 500 and Nasdaq 100. Meta Platforms (META) climbed over +4%, while Amazon.com (AMZN) and Alphabet (GOOGL) rose by more than +3% and +2% respectively. Nvidia (NVDA) recorded more than +1% gain, and Apple (AAPL) and Microsoft (MSFT) saw increases of +0.90% and +0.45% respectively.
The semiconductor sector continued to drive support for the broader market, with ON Semiconductor (ON) and Microchip Technology (MCHP) both up more than +4%. Additionally, Advanced Micro Devices (AMD), NXP Semiconductors NV (NXPI), Analog Devices (ADI), and Texas Instruments (TXN) made significant gains of over +3%.
Stocks related to cryptocurrency are also performing well, supported by a more than +4% rise in Bitcoin to a two-week high. Consequently, companies like Coinbase Global (COIN), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) have all climbed more than +3%.
A significant movement was noted as Azek Co (AZEK) surged over +18% following James Hardie Industries’ announcement of its acquisition for $8.75 billion in cash.
Boeing (BA) rose over +3%, buoyed by Melius Research’s upgrade from hold to buy, with a new price target of $204. Coherent Corp (COHR) gained more than +7% after an upgrade by Raymond James from outperform to strong buy, targeting $91.
Pinterest (PINS) experienced a jump of more than +4% post-upgrade from Guggenheim Securities, which changed its rating from neutral to buy, with a price target of $40.
Dun & Bradstreet Holdings (DNB) gained more than +2% following the agreement for acquisition by Clearlake Capital Group, valued at approximately $4.1 billion. Viasat Inc. (VSAT) climbed over +8% after Deutsche Bank upgraded its rating to buy from hold, targeting $15 per share.
FedEx (FDX) increased more than +3% after Jeffries increased its rating from hold to buy with a price target of $275. In contrast, Super Micro Computer (SMCI) fell more than -3%, leading the S&P 500’s list of losers after Goldman Sachs downgraded its rating from neutral to sell, targeting $32.
Lockheed Martin (LMT) declined more than -2%, adding to last Friday’s -4% drop, following the government’s selection of Boeing to develop the next-generation U.S. fighter jet. Additionally, Melius Research downgraded its rating on Lockheed from buy to hold.
Upcoming Earnings Reports (3/24/2025)
Aerovate Therapeutics Inc (AVTE), AMMO Inc (POWW), Enerpac Tool Group Corp (EPAC), Intuitive Machines Inc (LUNR), and KB Home (KBH) are set to report earnings.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
