Stock Market Rallies Amid Government Shutdown Hopes and Economic Data

The S&P 500 Index ($SPX) (SPY) closed up +2.13% on Friday, while the Dow Jones Industrials Index ($DOWI) (DIA) rose by +1.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) increased by +2.49%. Additionally, March E-mini S&P futures (ESH25) rose +1.85%, and March E-mini Nasdaq futures (NQH25) gained +2.18%.

Market Stability Amid Shutdown Concerns

Stock indexes climbed on Friday as prospects for a U.S. government shutdown on March 15 diminished. Senate Democratic leader Chuck Schumer announced late Thursday that he would not block the Republican continuing resolution (CR) aimed at funding the government for six months. The House approved the bill earlier in the week, and the Senate was expected to cast its vote later that afternoon.

Global Equity Markets React Positively

Global equity markets saw gains as Chinese stocks rallied to a three-month high, driven by indications of increased policy support. Government officials from the finance ministry, commerce ministry, and the PBOC plan to hold a press conference on Monday announcing measures aimed at boosting consumer spending.

Nevertheless, stocks were somewhat pressured by data released on Friday from the University of Michigan, which showed that U.S. consumer sentiment in March fell to its lowest level in over two years, exacerbated by a surge in long-term inflation expectations—hitting a 32-year peak.

The University of Michigan’s March consumer sentiment index declined by -6.8 to a value of 57.9, falling short of the expectation of 63.0. Meanwhile, one-year inflation expectations unexpectedly climbed to a two-and-a-third-year high of +4.9%, surpassing the anticipated no change at +4.3%. Additionally, the five- to ten-year inflation expectations indicator rose unexpectedly to +3.9%, against expectations of a drop to +3.4%.

Bitcoin Price Surges Amid Stablecoin Legislation

Bitcoin (^BTCUSD) gained more than +4% after a stablecoin bill gained traction, showing promise for consideration by the full Senate following an 18-6 vote from the banking committee on Thursday. This bill, backed by President Trump, seeks to regulate privately issued, dollar-based stablecoins, potentially facilitating cheaper and faster financial transactions for smartphone users. Bitcoin also benefited from the broader stock recovery, contributing to a more risk-on investment environment.

Nonetheless, stocks faced challenges over the past week due to concerns that U.S. tariffs might hinder economic growth and corporate earnings. Last Tuesday, President Trump announced a 25% tariff on Canadian and Mexican goods and doubled tariffs on Chinese exports from 10% to 20%. Trump stated he would also impose reciprocal tariffs on foreign nations starting April 2, as originally planned. Trade tensions escalated on Wednesday when the European Union announced tariffs on approximately $28.3 billion of U.S. goods in retaliation for U.S. tariffs on steel and aluminum imports. Canada subsequently introduced 25% counter-tariffs on about $20.8 billion of U.S.-made products, including computers and sporting goods, in addition to U.S. steel and aluminum items.

The markets are currently pricing in just a 1% chance of a -25 basis point rate cut at the next Federal Open Market Committee (FOMC) meeting on March 18-19.

International Market Movements

International stock markets rallied on Friday, with the Euro Stoxx 50 increasing by +1.42%. China’s Shanghai Composite Index rose to a three-month high, closing up +1.81%. Japan’s Nikkei Stock 225 ended +0.72% higher.

Interest Rate Trends

June 10-year T-notes (ZNM25) fell by -9 ticks, with the 10-year T-note yield increasing by +4.6 basis points to 4.314%. The drop in T-notes occurred as safe-haven demand reduced, following stock market gains fueled by Schumer’s announcements regarding the Republican funding bill. T-notes also faced pressure from a decline in German bund prices subsequent to reports indicating agreement among German parties on a debt package. The decline continued following the unexpected rise in U.S. inflation expectations reported by the University of Michigan, which poses implications for the Federal Reserve’s policy stance.

European bond yields displayed mixed results; the 10-year German bund yield increased by +2.1 basis points to 2.876%, whereas the 10-year UK gilt yield decreased by -1.1 basis points to 4.666%. Additionally, the February CPI for Germany (EU harmonized) was revised down to +0.5% month-over-month and +2.6% year-over-year, from earlier reports of +0.6% and +2.8% respectively. ECB Governing Council member Holzmann mentioned that Eurozone interest rates are currently at neutral levels and voiced support for halting ECB rate cuts in the upcoming month. He emphasized that rising inflation poses a significant risk, potentially leading to rate hikes in response to increased spending in Europe.

Lastly, Handelsblatt reported that the German chancellor-in-waiting Merz reached an agreement with the Green party for a fiscal reform package aimed at enhancing investments in infrastructure and defense. Swaps are currently pricing in a 53% likelihood of a -25 basis point rate cut by the ECB at the April 17 policy meeting.

U.S. Stock Performers

The “Magnificent Seven” stocks all experienced gains on Friday, contributing to the broader market rally. Nvidia (NVDA) led the day with a rise of over +5% in the Dow Jones Industrials, while Tesla (TSLA) rose by over +3%. Meta Platforms (META), Microsoft (MSFT), and Amazon.com (AMZN) all increased more than +2%, with Apple (AAPL) and Alphabet (GOOGL) adding over +1% to their valuations.

Chip stocks surged; Micron Technology (MU) saw more than a +6% increase after Aletheia Capital upgraded the stock to “buy” from “hold,” establishing a price target of $145. ARM Holdings Plc (ARM) and Lam Research (LRCX) both rallied more than +5% and +4%, respectively. Other semiconductor companies like Applied Materials (AMAT), GlobalFoundries (GFS), Microchip Technology (MCHP), and Qualcomm (QCOM) also finished strong, closing up more than +3% apiece.

Moreover, crypto stocks gained ground alongside the rise in Bitcoin. MicroStrategy (MSTR) emerged as the biggest winner in the Nasdaq 100, with a substantial rise of +13%. Marathon Digital Holdings (MARA) grew by more than +7%, while Riot Platforms (RIOT) and Bit Digital (BTBT) increased by over +6%. Coinbase (COIN) added more than +2% to its value.

DocuSign (DOCU) jumped over +14% after projecting 2026 billings between $3.30 billion and $3.35 billion, exceeding the consensus estimate of $3.22 billion.

Semtech (SMTC) skyrocketed by more than +20% after announcing a Q4 adjusted EPS of 40 cents, surpassing expectations of 32 cents.

Ulta Beauty (ULTA) rose over +13% after reporting a Q4 EPS of $8.46, significantly higher than the consensus prediction of $7.12.

Crown Castle (CCI) grew more than +8% following an agreement to sell parts of its fiber business to an EQT AB fund and Zayo Group Holdings for a total of $8.5 billion.

Rubrik (RBRK) jumped by over +27% on optimistic forecasts for 2026 revenue estimates between $1.15 billion and $1.16 billion, higher than the consensus of $1.11 billion.

American Express (AXP) saw an increase of more than +3% after Baird upgraded the stock from underperform to neutral.

Conversely, Abbott Laboratories (ABT) led losses in the S&P 500, falling nearly -3% after a judge overturned a prior ruling that linked its infant formula to health risks. Meanwhile, T-Mobile US (TMUS) experienced a decline of over -1% after Citigroup downgraded its rating to neutral from buy based on valuation concerns.

Xponential Fitness (XPOF) plummeted -39% after forecasting full-year revenue between $315 million and $325 million, which was below the consensus expectation of $342.9 million.

Upcoming Earnings Reports

On March 17, the following companies are set to report their earnings: Altus Power Inc (AMPS), Alumis Inc (ALMS), Bicara Therapeutics Inc (BCAX), BioAge Labs Inc (BIOA), CAMP4 Therapeutics Corp (CAMP), Consolidated Water Co Ltd (CWCO), Diversified Energy Co PLC (DEC), Eastman Kodak Co (KODK), Energy Vault Holdings Inc (NRGV), Getty Images Holdings Inc (GETY), Hallador Energy Co (HNRG), Harrow Inc (HROW), Inhibrx Biosciences Inc (INBX), Inspired Entertainment Inc (INSE), MBX Biosciences Inc (MBX), Natural Gas Services Group Inc (NGS), Open Lending Corp (LPRO), Quanterix Corp (QTRX), Science Applications International Corp (SAIC), Septerna Inc (SEPN), Sonida Senior Living Inc (SNDA), T1 Energy Inc (TE), and Townsquare Media Inc (TSQ).

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

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