Market Recap – Monday, March 31, 2025
US Equities Recover Amid Trade Concerns and Economic Data
US equities closed mostly higher on Monday, with the Dow up 1.00%, the S&P 500 rising 0.55%, and the Russell 2000 gaining 0.56%. However, the Nasdaq lagged, dipping 0.14%. The market managed to recover from early selling pressure that followed a sharp sell-off on Friday, which had pushed the S&P 500 near its year-to-date lows and into correction territory. Despite the bounce, the major averages are still down for the fifth week in the past six. Tech stocks struggled, with the sector continuing its six-week losing streak, while Apple (AAPL) performed better than its peers. Other outperforming sectors included credit cards, rails, oil majors, insurance, and consumer staples, while industries like airlines, cruise lines, semiconductors, and biotech underperformed. Gold reached new record highs, rising 1.2%, while WTI crude settled up 3.1% amid geopolitical tensions.
Tariff and Geopolitical Concerns
The market's early weakness was attributed to negative tariff headlines and concerns over President Trump’s preference for more onerous tariffs. Over the weekend, several reports raised the possibility of across-the-board tariff hikes, including a 20% increase in tariffs on goods from all countries, which could add $600 billion in annual costs to the economy. While some of the trade rhetoric seemed to shift toward a more lenient stance, anxiety remained regarding potential pricing pressures and the impact on corporate and consumer sentiment. Despite this, there was talk of potential negotiations aimed at mitigating the tariff headwinds, offering some support for the market's recovery.
Economic Data and Fed Outlook
Economic data provided a mixed picture. The March Chicago PMI surprised to the upside, rising to 47.7, the highest reading since November 2023, although still in contraction territory. The Dallas Fed manufacturing index, however, fell to its lowest level since July 2024, signaling uncertainty. In Fed commentary, New York Fed President Williams emphasized a patient approach to policy, stating that the Fed could afford to wait for more data before making any changes. Richmond Fed President Barkin also underscored the need for confidence before cutting rates, adding that economic uncertainty surrounding tariffs could weigh on business and consumer sentiment. Markets are expecting more clarity in the coming days as Trump’s reciprocal tariff announcement and key economic reports are released.
Corporate News and Earnings Updates
In corporate news, Moderna (MRNA) was the biggest decliner among vaccine stocks following the resignation of FDA vaccine chief Dr. Peter Marks. Mr. Cooper Group (COOP) rose 14.5% after announcing its acquisition by Rocket Companies (RKT) for $9.4 billion in stock. Apple (AAPL) was in focus after reports of a new Health app and a growing rivalry with SpaceX. In earnings news, there were limited updates, but notable reports are expected this week from companies like PVH, RH, and CAG, as well as Tesla’s Q1 deliveries.
Notable Market Movers
Among notable gainers, Corcept Therapeutics (CORT) surged 109.1% following a successful Phase 3 trial in ovarian cancer, while Mr. Cooper Group (COOP) gained 14.5% after its acquisition announcement. Celsius Holdings (CELH) rose 5.9% after an upgrade to “buy” at Truist. On the downside, Vaxcyte (PCVX) fell 45.6% after disappointing Phase 2 trial data, and Moderna (MRNA) declined 8.9% after the resignation of the FDA vaccine director.
Here’s Our Take
The market continues to grapple with heightened uncertainty due to trade policy, tariffs, and geopolitical tensions. While today's rebound was encouraging, the broader outlook remains cautious as investors await further clarity from President Trump’s reciprocal tariff announcement and key economic data this week. The risk of additional tariffs, especially those targeting consumer goods, could weigh on corporate earnings and consumer spending. As a result, sectors sensitive to trade, such as semiconductors and industrials, may continue to face volatility. On the other hand, defensive sectors like utilities, food and beverage, and gold could offer safer havens in the current environment. Investors should remain vigilant, closely monitor macro developments, and consider diversifying into sectors that are more resilient to the ongoing trade and inflation risks.