Market Overview
The stock market continued its downward trend today following a brief reprieve yesterday, with the S&P 500 declining by 1.4% and the Nasdaq Composite falling by 2.0%. Both indices not only lost yesterday's gains but also dropped further, leading the S&P 500 into correction territory, which is defined as being 10% below its all-time high from February 19. The Nasdaq Composite also moved deeper into correction territory.
Economic Reports
- The February Producer Price Index (PPI) showed lower-than-expected headline numbers, with a 0.0% change compared to the consensus of 0.3%. The previous month's figure was revised to 0.6% from 0.4%.
- The Core PPI decreased by 0.1%, against a consensus of 0.3%. The prior figure was revised to 0.5% from 0.3%.
- Weekly jobless claims were relatively low, with initial claims at 220,000 (consensus 228,000) and continuing claims at 1.870 million, down from 1.897 million.
Despite these positive-looking reports, the potential negative impact of U.S. trade policy on future inflation overshadowed them. The key takeaway is that while inflation at the wholesale level is improving, it remains too high. Concerns persist that disinflation may not continue due to escalating tariff battles.
Trade Policy Concerns
President Donald Trump announced a potential 200% tariff on European beverage imports, including wines and spirits. This decision was a response to the European Union's recent tariffs on American whiskey. The move has intensified fears of a prolonged trade war, which could hinder global economic growth.
Corporate News
Negative sentiment in equities was also driven by corporate news. Adobe (ADBE, Financial) provided relatively disappointing in-line guidance, while SentinelOne (S) and UiPath (PATH) issued disappointing guidance as well. This negatively affected growth stocks, causing the Russell 3000 Growth Index to decline by 2.2%.
Treasury Market
Treasuries saw gains in response to the day's data, with the 10-year yield settling four basis points lower at 4.27% and the 2-year yield also settling four basis points lower at 3.95%. The U.S. Treasury completed a weak 30-year bond reopening, concluding this week's mediocre note and bond auction slate.
Market Indices Year-to-Date (YTD) Performance
- Dow Jones Industrial Average: -4.1%
- S&P 500: -6.1%
- S&P Midcap 400: -8.4%
- Nasdaq Composite: -10.4%
- Russell 2000: -10.6%
Upcoming Economic Data
Friday's economic data will include the preliminary March University of Michigan Consumer Sentiment report, with a consensus of 65.6 compared to the prior 64.7.
Guru Stock Picks
Carl Icahn has made the following transactions:
- Add in UAN by 0.12%
Today's News
Tesla (TSLA, Financial) has issued a warning to the U.S. trade representative about the negative impact of retaliatory tariffs on automakers and consumers, particularly in the electric vehicle sector. The company emphasized that despite efforts to localize supply chains, certain parts remain difficult to source domestically. Tesla urged a reevaluation of domestic supply chain limitations to avoid burdening U.S. manufacturers with cost-prohibitive trade actions.
DocuSign (DOCU, Financial) shares rose 4% in extended trading, despite issuing a fiscal 2026 outlook that fell slightly short of Wall Street expectations. The company forecasts revenue between $3.14 billion and $3.15 billion, with subscription revenue making up the majority. However, billings are expected to exceed estimates, providing some optimism for investors.
Intel (INTC, Financial) saw its stock surge 15% after announcing Lip-Bu Tan as its new CEO. Tan's extensive experience, including his tenure at Cadence Design Systems (CDNS), has been well-received by analysts, who remain cautiously optimistic about his potential to lead a turnaround for the embattled chipmaker.
President Trump has threatened to impose a 200% tariff on all alcoholic beverages imported from the European Union. This move follows the EU's announcement of countermeasures to U.S. tariffs on steel and aluminum, heightening tensions in the ongoing trade war.
Enterprise software stocks, including Adobe (ADBE, Financial) and Salesforce (CRM, Financial), experienced significant declines as their revenue guidance fell short of expectations. Adobe's shares dropped 14%, while Salesforce and ServiceNow (NOW, Financial) also saw notable decreases, reflecting broader concerns in the sector.
Retail giants like Amazon (AMZN, Financial), Costco (COST, Financial), and Walmart (WMT, Financial) faced selling pressure amid tariff uncertainty and decreased consumer confidence. Amazon fell 3.1%, while Costco and Walmart also experienced declines, highlighting the sector's vulnerability to economic shifts.
American Eagle Outfitters (AEO, Financial) is facing challenges as cold weather and decreased demand led to a negative sales forecast for the first quarter and FY25. The company remains exposed to U.S. trade policy impacts, particularly concerning its production in China and potential new trade tensions with Vietnam.
D-Wave Quantum (QBTS, Financial) reported a significant increase in bookings and revenue, driven by the sale of its Advantage annealing quantum computer. The company's stock rose 5.7% as it expects to exceed Wall Street's revenue consensus for the first quarter of fiscal 2025.
Apple (AAPL, Financial) experienced a 9% drop in consumer spending on its hardware in February, according to KeyBanc Capital Markets. The decline was attributed to seasonal factors and delayed product introductions, raising concerns about the company's growth prospects.
GuruFocus Stock Analysis
- Warren Buffett's Market Exit Looks Genius as Stocks Plunge by Muslim Farooque
- Walmart Clashes with China Over Supplier Price Cuts Amid Tariff Woes by Muslim Farooque
- UAE Official Seeks U.S. Approval for Nvidia AI Chip Purchases by Faizan Farooque
- UiPath Shares Drop Amid Weak Fiscal 2026 Outlook by Faizan Farooque
- TSMC Proposes Joint Venture With U.S. Chipmakers to Operate Intel Foundries by Faizan Farooque
