Market Recap – Tuesday, March 18, 2025
Markets Reverse Gains as Tech Weakens
U.S. equities closed lower after Monday’s rebound, with the S&P 500 (-1.07%), Nasdaq (-1.71%), Dow (-0.62%), and Russell 2000 (-0.89%) all retreating. Big tech stocks led the decline, with Tesla (-5.3%) hit by concerns over China’s EV competition, Google (-2.2%) down after confirming a $30B+ acquisition of cybersecurity startup Wiz, and Nvidia (-1.9%) weaker despite ongoing excitement around its GTC conference. Other underperformers included semis, software, airlines, insurers, travel stocks, and housing-related retail. Meanwhile, energy, managed care, media, credit cards, and money-center banks outperformed.
Treasuries held steady to firmer at the short end of the curve, with a well-received $13B auction of 20-year bonds. The dollar dipped 0.1%, gold rose 1.2%, while Bitcoin (-2.9%) and WTI crude (-0.9%) both declined.
Investor Sentiment Wavers Amid Policy Uncertainty
Skepticism about the sustainability of the recent market bounce remains elevated as investors brace for Trump’s reciprocal tariff decision on April 2. Reports continue to highlight complications in calculating and implementing tariffs, adding to uncertainty about corporate earnings and potential economic spillovers. The buyback blackout period, record-low U.S. equity exposure, and weakening U.S. exceptionalism narrative are additional headwinds. Meanwhile, contrarian sentiment readings and clean positioning provide some reasons for optimism, with resilient economic data supporting a potential rebalancing tailwind.
Economic Data: Housing Starts Surprise to the Upside
February housing starts surged 11.2% month-over-month to 1.501M SAAR, well ahead of 1.385M consensus.
Building permits were largely in line, but down 1.2% month-over-month.
February import prices rose 0.4%, defying expectations for a decline, while export prices also edged up.
Industrial production missed expectations, adding to concerns about the manufacturing sector’s outlook.
Geopolitical developments also weighed on sentiment, with President Trump and Russia’s Putin speaking for 90 minutes on the Ukraine war. While the readout lacked specifics, both leaders agreed to immediately begin negotiations toward a ceasefire. The call did not clarify whether Ukraine would be required to make territorial concessions, leaving uncertainty over potential U.S. sanctions relief for Russia. Meanwhile, Germany’s lower house approved changes to its debt brake, with the upper house set to vote on Friday.
Corporate Highlights: M&A, AI, and Regulatory Hurdles
Google (-2.2%) confirmed its $30B+ acquisition of Wiz, reinforcing its push into cybersecurity.
Amazon (-1.4%) is reportedly considering cutting 14K managerial roles while offering AI chips at prices below Nvidia.
Tesla (-5.3%) fell on BYD’s announcement of an EV battery with five-minute charging, increasing competitive pressure.
Lucid (+8.8%) jumped after Morgan Stanley upgraded it to Equal Weight, citing an AI-driven re-rating.
Peabody Energy (+6.2%) and other coal stocks rallied after Trump announced his administration is “immediately restarting coal production.”
Sarepta (-27.4%) plunged after a patient death in a clinical trial, prompting an update to safety warnings.
Allegiant (-3.3%) cut its Q1 outlook, citing leisure demand softness.
Here’s Our Take
Big Tech Weakness a Headwind – The Nasdaq’s outsized decline highlights continued pressure on mega-cap tech, with the Mag 7 trade unwinding as sentiment shifts.
Tariff Risks Loom Large – With Trump’s reciprocal tariffs approaching on April 2, investors should expect further market volatility in global trade-sensitive sectors.
Consumer Resilience Under Scrutiny – While housing starts were strong, rising import prices and weaker industrial production suggest economic cracks could be forming.
Watch for FOMC Impact – The Fed’s policy decision on Wednesday, along with Powell’s press conference, will be crucial in shaping rate expectations and market direction.
As tariff uncertainty and Fed policy continue to dominate market sentiment, investors should brace for near-term volatility, while looking for opportunities in defensive sectors and undervalued industrials.