US Stock Markets Decline Amid Trade Tensions and Economic Data

The S&P 500 Index ($SPX) (SPY) closed down 1.39% on Thursday, while the Dow Jones Industrials Index ($DOWI) (DIA) fell 1.30%. The Nasdaq 100 Index ($IUXX) (QQQ) experienced a larger drop of 1.89%. Notably, March E-mini S&P futures (ESH25) decreased by 1.16%, and March E-mini Nasdaq futures (NQH25) fell by 1.56%.

Stock indexes plummeted on Thursday, reaching six-month lows across key indices. The risk-off sentiment was fueled by rising trade tensions, particularly President Trump’s threat of a 200% tariff on European wine, champagne, and other alcoholic beverages unless the EU repeals its tax on U.S. whiskey. Additional pressure followed as President Trump confirmed he would not roll back tariffs on steel and aluminum implemented this week or his plans for upcoming reciprocal tariffs set for April 2.

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Despite the stock market downturn, Thursday’s U.S. economic news offered some positive indicators, including strength in the labor market and easing price pressures. Weekly U.S. jobless claims unexpectedly declined by 2,000 to 220,000, contrasting with the forecasted increase to 225,000.

For February, the PPI final demand reported no change month-over-month but rose by 3.2% year-over-year, slightly below expectations of 0.3% month-over-month and 3.3% year-over-year. Additionally, the February PPI excluding food and energy showed a -0.1% month-over-month change and a year-over-year increase of 3.4%, also underperforming expectations.

Stocks have faced consistent pressure this week, largely due to fears that U.S. tariffs could hinder economic growth and corporate earnings. Last Tuesday, President Trump imposed a 25% tariff on goods from Canada and Mexico, while doubling the tariff on Chinese goods from 10% to 20%. Moreover, the trade situation escalated on Wednesday as the European Union announced tariffs on up to $28.3 billion of U.S. goods, including soybeans, beef, and poultry, in response to the tariffs placed on steel and aluminum imports. Canada also announced 25% counter-tariffs on approximately $20.8 billion of U.S. goods, including computers and sporting goods.

Market Outlook and Economic Indicators

Focus for the remainder of the week will shift to U.S. trade policies. On Friday, the University of Michigan is set to release its March consumer sentiment index, which is anticipated to decrease by 1.2 to 63.5. Additionally, the markets await Congress’s ability to pass a spending bill before the March 15 deadline to avoid a government shutdown.

Currently, the markets indicate a mere 1% chance of a 25 basis point rate cut at the upcoming FOMC meeting scheduled for March 18-19.

Internationally, stock markets also closed lower on Thursday. The Euro Stoxx 50 fell by 0.58%. China’s Shanghai Composite Index dipped by 0.39%, while Japan’s Nikkei Stock 225 closed down by 0.08%.

Interest Rates and Economic Performance

June 10-year T-notes (ZNM25) settled up by 9.5 ticks on Thursday, with the 10-year T-note yield declining by 4.2 basis points to 4.270%. The notes gained ground after recovering from a one-week low as safe-haven buying increased in response to declines in equities. The softer-than-expected February PPI report further supported T-notes.

Initially, T-notes faced downwards pressure due to concerns that tariff escalations might fuel price increases following President Trump’s threat to raise alcohol tariffs on EU products. Furthermore, as weekly jobless claims unexpectedly fell, it posed a hawkish signal for Fed policy. Demand for the Treasury’s $22 billion 30-year T-bond auction weakened, marking a bid-to-cover ratio of 2.37, below the average of 2.43 over the last ten auctions.

In Europe, bond yields trended downward on Thursday. The yield on the 10-year German bund fell 2.2 basis points to 2.855%, while the 10-year UK gilt yield decreased 4.5 basis points to 4.677%.

January’s Eurozone industrial production increased by 0.8% month-over-month, surpassing expectations of 0.6% month-over-month, marking the strongest growth in five months. Furthermore, ECB Governing Council member and Bundesbank President Nagel stated, “We will achieve price stability this year,” projecting Eurozone inflation to align with the ECB’s 2% target by the end of 2025.

Swaps currently indicate a 50% chance of a 25 basis point rate cut by the ECB during the policy meeting on April 17.

US Stock Movers

The overall market suffered from a sell-off in the Magnificent Seven stocks, with Meta Platforms (META) down over 4% and Apple (AAPL) down more than 3%. Tesla (TSLA), Alphabet (GOOGL), and Amazon.com (AMZN) also dropped over 2%, while Microsoft (MSFT) slipped by more than 1%.

Adobe (ADBE) led the losses in the S&P 500 and Nasdaq 100, falling more than 13% after its Q2 adjusted EPS forecast of $4.95-$5.00 matched poorly against the consensus of $5.00.

UiPath (PATH) tumbled over 15% after announcing a forecast of $1.82 billion in annualized recurring revenue for 2026, falling short of the consensus of $1.88 billion. Similarly, Trade Desk (TTD) dropped over 10% after Cleveland Research downgraded its stock from buy to neutral.

Positive developments included Intel (INTC), which surged more than 14% following the announcement of Lip-Bu Tan as the new CEO, effective March 18. Defensive utility stocks, such as Exelon Corp (EXC), saw gains of over 2% due to the broader market decline, along with Consolidated Edison (ED), American Electric Power Cos (AEP), Eversource Energy (ES), and FirstEnergy (FE), each closing up more than 1%.

SentinelOne (S) fell over 5% after lowering its forecast for 2026 revenue to $1.01 billion, below the consensus estimate of $1.03 billion. Paccar (PCAR) slipped over 3% following the EPA’s announcement of potential rollbacks of truck emissions regulations starting in 2027, impacting expected earnings linked to new truck purchases. Additionally, Moelis & Co (MC) dropped over 2% following a double downgrade from Morgan Stanley, which set a price target of $70.

In contrast, Dollar General (DG) rose more than 6% after forecasting full-year comparable sales growth of 2.2%, surpassing the consensus estimate of 1.8%. Mining stocks, benefited from rising gold prices reaching record highs and silver prices hitting a 4.5-month peak. Newmont (NEM) rose over 4%, while Freeport McMoRan (FCX) and Southern Copper (SCCO) increased more than 2%.

Alkami Technology (ALKT) added over 4% after Stephens upgraded the stock to overweight with a target price of $40. Meanwhile, FMC Corp (FMC) rose more than 1% after Goldman Sachs reinstated coverage with a buy recommendation and a price target of $51.

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(March 14, 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
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