The S&P 500 Index ($SPX) (SPY) Monday closed down -2.70%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -2.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -3.81%.  March E-mini S&P futures (ESH25) fell -2.58%, and March E-mini Nasdaq futures (NQH25) fell -3.75%. 

Stock indexes plunged on Monday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting 5-3/4 month lows.  Stocks sank because of concern that tariffs and cuts to the federal workforce will dampen consumer confidence and curb economic growth.  Comments from President Trump on a Sunday news show added to pressure on stocks Monday when he said the US economy faces “a period of transition” from his tariff policies and refused to rule out the possibility of a recession.  Heavy losses in the Magnificent Seven stocks and chip stocks Monday also weighed on the overall market,

Stocks fell on fears that US tariffs will start a global trade war that weakens economic growth and corporate earnings.  Last Tuesday, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%. However, Mr. Trump granted US automakers a one-month tariff exemption and exempted tariffs for one month on Canada and Mexico for all goods and services compliant with the United States-Mexico-Canada Agreement (USMCA).  However, Mr. Trump reiterated that he would impose reciprocal tariffs on foreign nations on April 2, as planned.

Signs of weak demand in China’s economy were a negative factor for global growth prospects after China’s Feb CPI fell -0.7% y/y, weaker than expectations of -0.4% y/y, and the largest decline in 13 months.  Also, Jan PPI fell -2.2% y/y, weaker than expectations of -2.1% y/y.

The price of Bitcoin (^BTCUSD) sank more than -8% to a 4-month low on disappointment in President Trump’s order to create a strategic crypto reserve to be stocked initially with crypto forfeited to the government in legal proceedings rather than new outright crypto purchases.

Market attention this week will focus on Wednesday’s Feb US CPI report, which is expected to ease slightly to +2.9% y/y from +3.0% y/y in Jan.  The Feb core CPI is expected to ease to +3.2% y/y from +3.3% y/y in Jan.  Also, US trade policies will be in focus, with 25% tariffs on US imports of steel and aluminum scheduled to take effect on Wednesday. On Thursday, the Feb final-demand PPI is expected to ease to +3.2% y/y from +3.5% y/y in Jan.  On Friday, the University of Michigan’s March consumer sentiment index is expected to fall -1.2 to 63.5.  Finally, the markets will also see if Congress can approve a spending bill to avert a government shutdown ahead of a March 15 deadline.

The markets are discounting the chances at 7% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets on Monday settled mixed.  The Euro Stoxx 50 closed down -1.49%.  China’s Shanghai Composite Index closed down -0.19%.  Japan’s Nikkei Stock 225 recovered from a 5-1/2 month low and closed up by +0.38%.

Interest Rates

June 10-year T-notes (ZNM25) Monday closed up +24 ticks.  The 10-year T-note yield fell -10.1 bp to 4.200%.  June T-notes rallied Monday on tariff/economic concerns and on increased safe-haven demand with the plunge in equity prices.  T-notes also had carryover support from Monday’s strength in 10-year German bunds.  In addition, falling inflation expectations are bullish for T-notes after the 10-year breakeven inflation rate fell to a 2-1/4 month low Monday at 2.311%.

T-note prices were undercut by supply pressures as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with Tuesday’s $58 billion auction of 3-year T-notes. 

European bond yields on Monday were mixed.  The 10-year German bund yield fell -0.3 bp to 2.833%.  The 10-year UK gilt yield rose +0.6 bp to 4.644%.

The Eurozone Mar Sentix investor confidence index rose +9.8 points to a 9-month high of -2.9, stronger than expectations of -9.3.

German Jan industrial production rose +2.0% m/m, stronger than expectations of +1.5% m/m and the biggest increase in 5 months.

German trade news was mixed as German Jan exports unexpectedly fell -2.5% m/m versus expectations of a +0.5% m/m increase, the largest decline in 8 months.  Conversely, Jan imports rose +1.2% m/m, stronger than expectations of +0.5% m/m. 

ECB Governing Council member Kazimir warned that the ECB must remain vigilant as “inflation risks remain tilted to the upside.”

Swaps are discounting the chances at 49% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The weakness of the Magnificent Seven stocks Monday weighed on the broader market.  Tesla (TSLA) closed down more than -15% to lead losers in the S&P 500 on concern about the car company’s plunging sales.  Also, Nvidia (NVDA) closed down more than -5% to lead losers in the Dow Jones Industrials.   Apple (AAPL) closed down more than -5%, and Alphabet (GOOGL) and Meta Platforms (META) closed down more than -4%.  Finally, Amazon.com (AMZN) and Microsoft (MSFT) closed down more than -2%. 

Chip stocks tumbled on Monday, with Microchip Technology (MCHP) closing down more than -10% and Marvell Technology (MRVL) closing down more than -7%.  Also, ASML Holding NV (ASML), Lam Research (LRCX), NXP Semiconductors NV (NXPI), and Micron Technology (MU) closed down more than -6%.  In addition, Broadcom (AVGO) closed down more than -5%, and Analog Devices (ADI) and KLA Corp (KLAC) closed down more than -4%. 

Due to consumer spending concerns, travel stocks and cruise line operators retreated Monday.  Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) closed down more than -7%.  Also, United Airlines Holdings (UAL) closed down more than -6%, and Delta Air Lines (DAL) closed down more than -5%.  In addition, Southwest Airlines (LUV) and Royal Caribbean Cruises Ltd (RCL) closed down more than -3%.   

Cryptocurrency-exposed stocks sank Monday, with the price of Bitcoin falling more than -8% to a 4-month low.  As a result, MicroStrategy (MSTR) closed down more than -16% to lead losers in the Nasdaq 100.  Also, Coinbase Global (COIN), MARA Holdings (MARA), and Riot Platforms (RIOT) closed down more than -8%.  

Rocket Cos.  (RKT) closed down more than -15% after agreeing to buy Redfin in an all-stock deal valued at $1.75 billion.

Dexcom (DXCM) closed down more than -8% after it said it received a warning letter from the FDA following inspections of its facilities in San Diego, California, and Messa, Arizona.

Emerson Electric (EMR) closed down more than -5% after Barclays downgraded the stock to underweight from equal weight with a price target of $110. 

ServiceNow (NOW) closed down more than -7% after agreeing to buy Moveworks for $2.85 billion. 

Regeneron Pharmaceuticals (REGN) closed up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after it said a late-stage trial of its Dupixent to treat a rare skin disorder met all main goals.

Defensive food and beverage stocks rallied Monday due to the weakness in the broader market.  Archer-Daniels-Midland (ADM) closed up more than +2%.  Also, Molson Coors Beverage (TAP), Conagra Brands (CAG), PepsiCo (PEP), Hormel Foods (HRL), Tyson Foods (TSN), General Mills (GIS), and Monster Beverage (MNST) closed up more than +1%. 

CME Group (CME) closed up more than +3% after Raymond James upgraded the stock to outperform from market perform with a price target of $287.

Paycom Software (PAYC) closed up more than +2% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $245. 

Cognizant Technology Solutions (CTSH) closed up more than +1% after the Wall Street Journal reported that Mantle Ridge has accumulated a more than $1 billion stake in the company. 

Earnings Reports (3/11/2025)

Casey’s General Stores Inc (CASY), Ciena Corp (CIEN), Dick’s Sporting Goods Inc (DKS), Ferguson Enterprises Inc (FERG), Kohl’s Corp (KSS).