US Stock Markets Dip Amid Economic Worries and Inflation Concerns

The S&P 500 Index ($SPX) (SPY) is down -1.53% today, while the Dow Jones Industrials Index ($DOWI) (DIA) has decreased by -1.35%. The Nasdaq 100 Index ($IUXX) (QQQ) is showing a steeper decline, down -1.98%. Additionally, June E-mini S&P futures (ESM25) are down -1.59%, and June E-mini Nasdaq futures (NQM25) have dropped -2.02%.

Stock indexes are falling due to concerns regarding US trade policies, evidenced by today’s economic data reflecting weaker-than-expected household demand and persistent inflation trends. For February, personal spending rose less than expected while the core PCE price index, which the Federal Reserve prefers as an inflation measure, increased more than forecasted.

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Losses in stock markets today accelerated as economic fears and rising inflation expectations grew. The University of Michigan’s March consumer sentiment index was adjusted downwards to a two-and-a-half-year low. Meanwhile, inflation expectations also rose, contributing to the market’s drop. Stocks from the so-called Magnificent Seven, alongside chipmakers and travel-related companies, led these broader market losses.

Comments from Federal Reserve officials on Thursday evening added to the bearish sentiment among investors. Boston Fed President Collins characterized tariff-induced inflation as “inevitable” in the short term. Similarly, Richmond Fed President Barkin noted that abrupt changes in US trade policy have fostered “a sense of instability” among businesses, suggesting that such conditions could dampen demand.

In terms of economic indicators, US personal spending rose by +0.4% month-over-month in February, slightly missing expectations of +0.5%. However, personal income increased by +0.8% month-over-month, surpassing expectations of +0.4% for its largest gain in 13 months.

The core PCE price index for February rose +0.4% month-over-month and +2.8% year-over-year, also above forecasts of +0.3% and +2.7%, respectively.

The downward revision for the University of Michigan’s consumer sentiment index resulted in a new low of 57.0 for March, down by -0.9 from prior readings, which did not align with expectations of stability at 57.9.

Furthermore, March’s one-year inflation expectations were revised upward to +5.0%, a two-and-a-half-year high, surpassing initial expectations of +4.9%. On long-term forecasts, the March 5-10 year inflation expectations also adjusted higher to 4.1% year-over-year, exceeding predictions of 3.9%.

Recent tariffs imposed by President Trump have put pressure on stocks, with expectations that they will hinder economic growth and corporate earnings. On March 4, tariffs of 25% were enforced on Canadian and Mexican goods, and the tariff on Chinese imports was increased from 10% to 20%. On March 8, Trump confirmed reciprocal tariffs and additional sector-specific tariffs are set to be enforced starting April 2. Just this week, a new proclamation initiated a 25% tariff on US auto imports, effective April 3. The proposed tariffs will initially affect vehicles assembled outside the US and will extend to automobile parts by May 3. Trump labeled these tariffs as “permanent,” negating any possibility for negotiations on exceptions.

Current market sentiment indicates an 18% likelihood of a -25 basis point rate cut in the upcoming May FOMC meeting.

Globally, stock markets are also down. The Euro Stoxx 50 hit a two-week low, declining by -1.12%. In Asia, China’s Shanghai Composite fell by -0.67%, while Japan’s Nikkei Stock 225 closed down -1.80%, also reaching a two-week low.

Interest Rates

June 10-year T-notes (ZNM25) saw an increase today, rising +19 ticks with the 10-year T-note yield falling by -8.1 basis points to 4.278%. This upward momentum in T-notes comes from carryover support following a rally in 10-year German bunds, along with relief from the conclusion of this week’s $211 billion Treasury auction for T-notes and floating rate notes. The T-note gains were accelerated by the stock market’s retreat, driven in part by the downward revision of the University of Michigan’s consumer sentiment index.

The latest US economic data presents a mixed bag for T-notes; while personal spending grew less than anticipated for February, the core PCE price index showed a higher increase than expected. Additionally, inflation expectations for March were revised upward.

Across Europe, bond yields are lower today. The yield on the 10-year German bund fell to a three-week low of 2.707%, dropping -4.4 basis points to 2.729%. The 10-year UK gilt yield also decreased, down -7.8 basis points to 4.705%.

An unexpected decline in the Eurozone’s March economic confidence index saw a drop of -1.1 to 95.2, falling short of predictions that it would rise to 96.7.

In Germany, March unemployment numbers rose by +26,000, indicating a weaker labor market than the forecasted +10,000. Consequently, the unemployment rate climbed +0.1 to a four-and-a-half-year high at 6.3%, contrasting with expectations of stability at 6.2%.

Swaps are currently pricing in an 85% chance for a -25 basis point rate cut by the European Central Bank (ECB) at its policy meeting on April 17.

US Stock Movers

Today, the decline of the Magnificent Seven stocks has negatively influenced the market as a whole. Notably, Tesla (TSLA) and Amazon.com (AMZN) fell over -3%. Alphabet (GOOGL), Microsoft (MSFT), and Meta Platforms (META) also saw drops greater than -2%. Other significant declines include Apple (AAPL) and Nvidia (NVDA), both down by more than -1%.

Chip manufacturers are taking a hit in today’s trading, with Marvell Technology (MRVL) and ON Semiconductor (ON) declining over -4%. GlobalFoundries (GFS), KLA Corp (KLAC), and Micron Technology (MU) each saw losses of more than -3%. Additional chip stocks like NXP Semiconductors NV (NXPI), Microchip Technology (MCHP), AMD, Lam Research (LRCX), Broadcom (AVGO), and Qualcomm (QCOM) are down by over -2%.

Lululemon Athletica (LULU) is leading declines in the S&P 500 and Nasdaq 100, dropping more than -15% after projecting 2026 net revenue between $11.15 billion and $11.30 billion—below the consensus of $11.31 billion.

Economic concerns are also impacting travel and hospitality stocks today. Delta Air Lines (DAL), Royal Caribbean Cruises Ltd (RCL), and United Airlines Holdings (UAL) are all down by over -4%. Further, MGM Resorts International (MGM), Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Wynn Resorts Ltd (WYNN) have fallen by more than -3%. Other notable drops include Booking Holdings (BKNG), Las Vegas Sands (LVS), and Hilton Worldwide Holdings (HLT), each down over -2%.

Oxford Industries (OXM) decreased more than -4% after projecting Q1 adjusted EPS of $1.70 to $1.90, significantly lower than the consensus of $2.73.

Leidos Holdings (LDOS) and Oracle (ORCL) fell over -1% following the announcement from the US Department of Defense regarding the cancellation of plans to utilize software from both companies for civilian workforce management, an aspect of ongoing cost-cutting measures at the Pentagon.

Meanwhile, WR Berkley (WRB) rose more than +8% after Mitsui Sumitomo Insurance agreed to acquire 15% of the company’s outstanding shares.

AppLovin (APP) gained more than +3% as it was highlighted by Loop Capital Markets as a top investment pick, indicating they would act as “aggressive buyers” during market weakness.

Rocket Lab USA (RKLB) increased over +2% after being selected by the US Space Force for a $5.6 billion initiative. Similarly, AngloGold Ashanti Plc (AU) rose more than +2%, leading gold mining stocks as gold prices reached new record highs.

US Steel (X) gained over +1% after reports confirmed that the company remains in discussions with Nippon Steel regarding a deal to maintain their proposed merger.

Earnings Reports (3/28/2025)

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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.