Market Recap – Monday, March 24, 2025
Markets Surge as Tariff Anxiety Eases
US equities ended sharply higher on Monday, with the S&P 500 (+1.82%), Nasdaq (+2.29%), and Russell 2000 (+2.58%) all posting strong gains, recapturing momentum after four weeks of losses. The Dow gained 1.51%, finishing near session highs. The Mag 7 led the way, enjoying their best day since January — Tesla was a standout with its strongest session since November 6. Outperformance extended to semis, internet names, GSEs (on privatization hopes), cruise lines, and investment banks, while utilities, pharma, and consumer staples lagged. Treasuries sold off, with the 2Y back above 4% and the 10Y above 4.3%, as the curve flattened slightly. The dollar rose 0.2%, gold slipped 0.2%, and bitcoin futures jumped 5.1%. Crude oil rose 1.2%.
Tariff Narrative Turns Less Hawkish
Markets were buoyed by headlines suggesting that the April 2 reciprocal tariff announcement from President Trump will be narrower and more targeted than feared. While Trump said more tariffs on autos, lumber, and chips are coming, he also signaled "breaks" for many countries, suggesting flexibility. Although the final shape remains unclear, investors interpreted the weekend messaging as a de-escalation that lowered near-term trade war risks. However, concerns persist about lingering policy uncertainty, particularly for 2025 earnings forecasts.
Macro Data: Mixed, But Services Shine
The March flash PMI composite rose to a three-month high of 53.5, driven by strength in services (54.3), which offset a drop in manufacturing (49.8). Despite stronger activity, input prices surged at the fastest pace in nearly two years, though pass-through to output prices was more muted. Business expectations declined, reflecting growing caution around policy risks. Separately, Fed’s Bostic trimmed his forecast to just one rate cut in 2025, citing inflation sticking sideways, while businesses reportedly remain optimistic.
Corporate Headlines
It was a relatively quiet day on the corporate front. Standouts included:
AZEK surged after being acquired by James Hardie for ~$8.75B.
Fannie Mae and Freddie Mac rallied on reports of a potential privatization executive order from the White House.
Meta and OpenAI were each in discussions with Reliance Industries on AI/data partnerships in India.
FedEx, Pinterest, and Dutch Bros all moved higher following analyst upgrades.
In M&A, Dun & Bradstreet was taken private by Clearlake Capital, and RPD reached a settlement with activist Jana Partners.
Here’s Our Take
Monday’s broad rally reflected a temporary easing of macro concerns, especially around tariffs, with investors welcoming the potential for a more targeted trade policy rollout. The Mag 7 rebound, stronger services PMI, and flow-driven support — including pension rebalancing and net short covering — helped restore market confidence. However, risks remain. The April 2 tariff announcement still carries uncertainty, valuations remain stretched, and inflationary pressures are re-emerging. Meanwhile, recent corporate earnings have been mixed, highlighting potential for negative preannouncements ahead of Q1 reporting season.
While Monday’s strength provides a technical lift, we urge investors to stay attentive to upcoming data on consumer confidence, new home sales, and core PCE inflation later this week. Continued volatility around trade and earnings means a disciplined, fundamentals-driven approach remains essential.