Market Recap – Thursday, March 27, 2025
Stocks Struggle Amid Tariff Concerns and Mixed Economic Data
US equities finished lower on Thursday, with the Dow down 0.37%, the S&P 500 dropping 0.33%, the Nasdaq falling 0.53%, and the Russell 2000 declining by 0.39%. Trading was somewhat choppy, with stocks finishing off their worst levels, though major indices were still on track for modest weekly gains. The auto sector and its suppliers were hit hard following the announcement of additional tariffs, while semiconductors, software, and copper stocks also underperformed. Big tech stocks were mixed — Tesla (TSLA) bounced back after Wednesday's selloff, but NVIDIA (NVDA) continued to face headwinds. On the upside, industries such as property and casualty insurance, staples retailers, food and beverage, logistics, and utilities outperformed. The Treasury market was mixed, with a curve steepening, while the dollar index fell by 0.3%. Gold saw a significant rally, closing up 1.3%, marking a fresh record high. Bitcoin futures rose by 0.7%, and WTI crude settled 0.4% higher.
Tariff and Trade Tensions
Market sentiment remained cautious as investors digested the latest trade headlines, including President Trump’s announcement of a permanent 25% tariff on cars not produced in the US. These tariffs, set to go into effect on April 3, will include auto parts, with the possibility of higher tariffs if retaliation occurs. Trump also previewed upcoming levies on pharmaceuticals and lumber. While the tariffs have raised inflationary concerns, particularly within the auto sector, Trump’s comments on lenient reciprocal tariffs provided some counterbalance. This ongoing policy uncertainty continues to weigh on market sentiment, with concerns over geopolitical risks and the potential for rising costs to dampen consumer spending.
Economic Data and Outlook
Economic data showed some resilience amidst the broader risk-off sentiment. Initial jobless claims were largely in-line with expectations, and continuing claims came in lower than forecast. Final Q4 GDP growth was slightly above expectations, ticking up to 2.4% from a prior 2.3% reading, supported by strong consumer spending. February pending home sales also beat expectations, rising 2.0% month-over-month. However, market participants remain cautious about the broader economic outlook, with geopolitical uncertainty, tariff risks, and concerns about the sustainability of AI-driven growth adding to the bearish narrative. The Federal Reserve’s hawkish stance on tariffs and inflationary risks continues to contribute to the uncertain environment.
Notable Market Movers
Among notable gainers, Concentrix (CNXC) surged 42.4% after strong Q1 earnings and guidance, driven by gains in data annotation services. Soleno Therapeutics (SLNO) rose 37.6% following FDA approval for its hyperphagia treatment, while Winnebago (WGO) gained 8.1% after a solid earnings beat. On the downside, GameStop (GME) fell 22.1% after announcing a $1.3B convertible debt offering to fund Bitcoin purchases, and AppLovin (APP) dropped 20.1% after a short report flagged concerns about e-commerce conversions. Other decliners included Verint Systems (VRNT), TD SYNNEX (SNX), and Jefferies Financial Group (JEF).
Here’s Our Take
The market remains under pressure, with concerns about trade policy uncertainty, inflation risks from the newly announced auto tariffs, and lingering fears over recession risks. While the economic data has shown some positive signs, the broader backdrop of geopolitical tensions, trade disruptions, and Fed hawkishness suggests that caution is warranted. The auto sector and companies reliant on global supply chains, like those in semiconductors and tech, could face headwinds in the short term, particularly if the tariffs lead to higher input costs or retaliatory measures. On the other hand, defensive sectors such as utilities, logistics, and insurance, along with stocks benefiting from AI and data annotation services, may offer relative outperformance in the current environment. Investors should consider focusing on sectors with resilient earnings and growth drivers while remaining mindful of potential policy risks.