U.S. equities closed higher for a second straight session, with the S&P 500 (+0.64%), Dow (+0.85%), and Russell 2000 (+1.19%) outperforming, while the Nasdaq (+0.31%) lagged. The equal-weight S&P 500 outperformed the cap-weighted index as sector rotation continued. Energy, managed care, asset managers, travel/tourism, industrials, and retail/apparel stocks led gains, while big tech stocks were mixed, with TSLA notably underperforming. Other laggards included credit cards, steel, casual dining, cosmetics, and homebuilders.
Bonds were mixed, with a flatter yield curve, the U.S. dollar dipped 0.3%, gold edged up 0.2%, and WTI crude added 0.6%. Bitcoin futures slipped 0.1% after a volatile week.
Retail Sales and Economic Data in Focus
The February retail sales report showed a 0.2% month-over-month gain, missing expectations of 0.7%, with downward revisions to January. However, control-group sales rose 1.0%, offering a more optimistic read on consumer spending trends. March’s Empire State Manufacturing Index plunged to -20.0 from 6.9, reflecting a sharp drop in new orders and optimism, while input costs climbed for a third consecutive month. The NAHB housing market index also fell to its lowest since August 2024, highlighting ongoing uncertainty in the real estate sector.
Investors are now shifting their focus to Tuesday’s housing starts, building permits, and industrial production data, as well as Wednesday’s FOMC decision, where Powell’s press conference and the updated Summary of Economic Projections (SEP) will provide key insights on the Fed’s rate path.
Corporate Highlights: M&A, Earnings, and AI Developments
Intel (+6.8%) rose on reports that incoming CEO Lip-Bu Tan plans to restructure its AI strategy and cut middle management staff.
PepsiCo (PEP) acquired poppi for $1.95 billion, expanding its health-focused beverage portfolio.
DFS (-6.9%) and COF (-6.9%) fell after reports suggested the DOJ could block their planned merger over antitrust concerns.
Tesla (-4.8%) dropped after Mizuho slashed its price target, citing weak February sales and geopolitical risks.
Affirm (-4.2%) fell after Walmart replaced it with Klarna as its exclusive BNPL provider.
American Eagle (+8.8%) surged after announcing a $200 million accelerated share repurchase program.
United States Steel (+2.9%) gained after the DOJ extended deadlines on its CFIUS lawsuit, potentially paving the way for its merger with Nippon Steel.
Looking ahead, markets will closely watch Nvidia’s GPU Tech Conference (GTC), where CEO Jensen Huang’s keynote on March 18 is expected to provide key updates on Blackwell Ultra, Rubin, China headwinds, and AI infrastructure trends. Google is also reportedly working with MediaTek on a new low-cost TPU chip for AI applications.
Here’s Our Take
Market Cautiously Optimistic – Stocks extended their bounce, but investors remain wary of tariff uncertainty, weaker economic data, and the upcoming FOMC decision.
Consumer Resilience Remains a Question Mark – The retail sales miss and sharp drop in consumer sentimentsuggest spending could be pressured in the coming months.
Tariff Watch – With reciprocal tariffs expected on April 2, further market volatility is likely as businesses and investors adjust to trade policy risks.
AI Catalysts – Nvidia’s GTC keynote on Tuesday could provide a short-term boost for AI stocks, depending on new product updates and forward guidance.
While today’s gains were encouraging, the road ahead remains volatile as investors navigate Fed policy, trade risks, and earnings uncertainty.