Market Recap – Thursday March 6, 2025
A Rough Day for Stocks as Tariff Uncertainty Persists
U.S. equities finished lower on Thursday, erasing Wednesday’s bounce as big tech, semiconductors, and financials led the decline. The Dow (-0.99%), S&P 500 (-1.78%), and Nasdaq (-2.61%) all posted sharp losses, with the S&P 500 now on track for its worst week since September. The Russell 2000 (-1.63%) also struggled as small caps remained under pressure.
Tech stocks saw heavy selling, with semiconductors, software, and AI-related names facing renewed pressure. Marvell (MRVL) fell nearly 20% after delivering in-line guidance that failed to impress investors, underscoring growing concerns about the sustainability of AI-driven capex. Meanwhile, MongoDB (MDB) dropped 27% on weak guidance and multiple downgrades.
On the upside, defensive sectors such as consumer staples, homebuilders, auto suppliers, and grocers held up relatively well. Kroger (KR) posted solid earnings, while Zscaler (ZS) and Burlington Stores (BURL) delivered upbeat reports that helped their stocks climb.
Tariff Uncertainty Weighs on Sentiment
Despite White House efforts to talk down tariff fears, investor concerns over a potential trade war escalation kept markets on edge. Reports indicated Trump signed an executive order delaying tariffs on Mexico and Canada for one month for USMCA-compliant goods, but uncertainty remains over broader trade policies. Commerce Secretary Lutnick reaffirmed that reciprocal tariffs from Canada and Mexico are still set to go into effect on April 2.
Adding to the unease, Trump ruled out any modifications to steel and aluminum tariffs, reinforcing fears of prolonged trade tensions. Market participants continue to debate whether the White House is prioritizing economic growth or taking a hardline stance on trade, regardless of market impact.
Economic Data: Jobs and Trade Deficit in Focus
Initial jobless claims fell to 221K, beating expectations but continuing claims rose to 1.897M, indicating some softening in the labor market.
Challenger layoffs surged to the highest level since July 2020, reflecting increased corporate cost-cutting efforts.
The U.S. trade deficit widened to a record $131.4B, driven by weaker exports and stronger imports.
Q4 productivity was revised higher to 1.5%, while unit labor costs were revised lower to 2.2%, suggesting some relief on wage-driven inflation pressures.
All eyes now turn to Friday’s nonfarm payrolls report, which will offer key insights into the strength of the labor market and potential implications for Federal Reserve policy.
Federal Reserve and ECB: Diverging Paths
Fed officials maintained a cautious stance, with Harker voicing concerns over consumer stress and Waller noting that policy remains restrictive but acknowledging signs of economic softness.
The European Central Bank (ECB) cut rates by 25 basis points, bringing total easing to 150 basis points since last summer, though ECB officials struck a more hawkish tone, signaling caution on further cuts.
Key Corporate Earnings and Stock Moves
Gainers:
BJ’s Wholesale (BJ) +12.2% – Strong Q4 earnings and reaffirmed long-term outlook.
Burlington Stores (BURL) +8.7% – Big Q4 beat despite cautious 2025 outlook.
Cracker Barrel (CBRL) +7.6% – Strong earnings and improved margins.
Fastenal (FAST) +4.5% – February sales growth accelerated to +5% YoY.
Zscaler (ZS) +2.9% – Delivered a solid earnings beat with improved margins.
Decliners:
MongoDB (MDB) -26.9% – Weak FY26 guidance and execution concerns.
Marvell (MRVL) -19.8% – AI growth narrative faces scrutiny after underwhelming guidance.
Grindr (GRND) -16.0% – Weak user growth and ad tech uncertainties.
Hims & Hers (HIMS) -15.9% – Court ruling added legal risk to GLP-1 prescription model.
Tesla (TSLA) -5.6% – Baird downgraded on slower sales trends in Europe, U.S., and China.
Here’s Our Take
Markets remain fragile, with elevated volatility, trade policy uncertainty, and shifting AI sentiment creating crosscurrents for investors.
AI-linked stocks are under pressure as high expectations collide with concerns about overinvestment and monetization challenges.
Tariff developments remain a wildcard, with short-term reprieves failing to ease broader concerns about escalating trade tensions.
The labor market is softening, but Friday’s jobs report will be key in shaping Fed rate expectations.
Defensive positioning is working, with consumer staples, homebuilders, and select retail names outperforming in a risk-off environment.
For investors, selectivity remains key. AI, trade policy, and Fed actions will be the primary drivers of near-term market direction, but long-term fundamentals remain intact for sectors with strong growth tailwinds.
Stay tuned for further analysis as markets navigate an increasingly complex landscape.