March 26, 2025

Ron Finklestien

“Market Struggles as Major Tech and Semiconductor Stocks Decline”

Mixed Market Performance Amid Trade Uncertainty and Economic Data

The S&P 500 Index ($SPX) (SPY) is down -0.33% today, while the Dow Jones Industrials Index ($DOWI) (DIA) has increased by +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) reports a decline of -0.94%. June E-mini S&P futures (ESM25) are down -0.35%, and June E-mini Nasdaq futures (NQM25) are also down -0.94%.

Market Mixed as Trade Concerns Loom

Today’s stock indexes are mixed, with the Dow Jones Industrials reaching a 2-1/2 week high. The market grapples with increasing pressure due to uncertainties surrounding U.S. trade policies. Investors await clarity on tariffs as the deadline for new reciprocal tariffs approaches on April 2, as indicated by President Trump.

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Additionally, weakness in major tech companies known as the Magnificent Seven, alongside chip makers, has contributed to the overall market decline. The market faced additional pressures after U.S. February core capital goods orders showed an unexpected decrease. Conversely, energy stocks have made gains, with WTI crude prices rising by more than +1%, reaching a three-week high.

Economic Reports and Market Trends

Earlier this week, optimism emerged as the prospect of new tariffs appeared more targeted than feared. President Trump suggested he might approach tariffs with increased leniency. Meanwhile, U.S. mortgage applications fell by -2.0% for the week ending March 21, with the purchase mortgage sub-index increasing by +0.7%, and the refinancing sub-index declining by -5.3%. The average 30-year fixed-rate mortgage fell slightly to 6.71%.

In another concerning report, U.S. February capital goods new orders (core) non-defense ex-aircraft fell by -0.3% m/m, marking the largest decline in seven months. This unexpected downturn raises concerns about reduced corporate capital spending driven by tariffs and a shaky economic forecast.

Monetary Policy Insights

Comments from Chicago Fed President Goolsbee added downward pressure to stocks and bonds today. He remarked that the Fed is no longer on the “golden path” seen in 2023 and 2024, indicating that the next rate cut could be delayed due to macroeconomic uncertainties. Investors will focus on upcoming reports: Thursday’s Q4 GDP is expected to remain unchanged at +2.3%, while March pending home sales are projected to rise by +1.0% m/m.

Personal spending and income figures for February are anticipated, with estimates of +0.5% and +0.4% respectively. Additionally, the February core PCE price index, the Fed’s preferred inflation metric, is expected to show increases of +0.3% m/m and +2.7% y/y. On Friday, the March University of Michigan consumer sentiment index is estimated to remain stable at 57.9.

Geopolitical Risks and Their Impact

Geopolitical tensions in the Middle East are negatively influencing stock performance. Israel has resumed airstrikes in Gaza after a two-month ceasefire with Hamas, escalating military involvement. U.S. Defense Secretary Hegseth emphasized a firm stance against Houthi rebels in Yemen. The Houthi rebels have threatened retaliation against U.S. vessels, adding to the market’s wariness.

Over the past three weeks, fears of economic growth slowdown due to U.S. tariffs have pressured stocks. On March 4, tariffs of 25% on goods from Canada and Mexico were implemented, and tariffs on Chinese goods were raised from 10% to 20%. President Trump confirmed on March 8 his intentions for reciprocal tariffs and sector-specific tariffs effective April 2.

Global Market Overview

International stock markets show mixed results today, with the Euro Stoxx 50 down -0.75%, the Shanghai Composite Index in China closing down -0.04%, and Japan’s Nikkei Stock 225 reaching a three-and-a-half-week high with a +0.65% gain.

Interest Rates and Bond Market

The June 10-year T-notes (ZNM25) are down -8 ticks, with the 10-year T-note yield climbing by +3.7 bp to 4.350%. T-notes are under pressure due to Goolsbee’s hawkish comments and rising inflation expectations, which pushed the 10-year breakeven inflation rate to a three-week high of 2.375%. Supply pressures are also significant, with an auction of $70 billion in 5-year T-notes and $28 billion of 2-year floating-rate notes being conducted today.

European bond yields are generally lower, with the 10-year German bund yield down -0.3 bp to 2.795% and the 10-year UK gilt yield down -2.4 bp to 4.729%. In the UK, February CPI rose +2.8% y/y, falling short of expectations of +3.0% y/y, while core CPI also missed estimates.

Swaps indicate a 71% probability for a -25 bp rate cut from the ECB at its upcoming April 17 policy meeting.

Stock Movers and Market Trends

Today’s market shows marked weakness in the Magnificent Seven stocks, significantly impacting overall performance. Tesla (TSLA) is down over -3%, while Amazon.com (AMZN), Meta Platforms (META), and Alphabet (GOOGL) are each down more than -1%. Microsoft (MSFT) is down -0.28%, and Apple (AAPL) is marginally lower by -0.09%.

Nvidia (NVDA) has tumbled more than -4% following reports that China’s National Development and Reform Commission recommends data centers avoid Nvidia’s H20 chips due to compliance issues. Chip makers, in general, are also suffering today, with Marvell Technology (MRVL) down over -4% and Advanced Micro Devices (AMD) down more than -3%. Other significant declines include Intel (INTC), Broadcom (AVGO), and Lam Research (LRCX), all down over -2%.

In contrast, energy sector stocks are rising today, driven by WTI crude reaching a three-week high. Devon Energy (DVN), Occidental Petroleum (OXY), and Valero Energy (VLO) have each gained more than +2%. Other energy companies like Schlumberger (SLB), Diamondback Energy (FANG), Marathon Petroleum (MPC), Haliburton (HAL), ConocoPhillips (COP), Exxon Mobil (XOM), and Chevron (CVX) are up more than +1%.

On a positive note, Dollar Tree (DLTR) has surged more than +8% following the sale of its Family Dollar chain for about $1 billion. Cintas (CTAS) increased over +7% after revising its full-year EPS estimate upward. Chewy (CHWY) is down more than -1% due to lower than expected sales forecasts for 2026. Meanwhile, CarMax (KMX) has risen more than +2% after a stock upgrade by Stephens.

Earnings Reports for 3/26/2025: Cintas Corp (CTAS), Concentrix Corp (CNXC), Dollar Tree Inc (DLTR), Jefferies Financial Group Inc (JEF), Paychex Inc (PAYX).


On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please view the Barchart Disclosure Policy
here.

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


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