The stock market definitely felt the heat last week. Major indices took a tumble, ranging from 2.4% to 4.1% in the red. Blame it on a mix of growth worries, tariff talk, and, let’s be honest, some plain old technical selling pressure. Think of it like this: the market was trying to parallel park, and just kept bumping into the other cars.
The trade war heated up after 25% tariffs for Canada and Mexico went into effect and tariffs on China increased by 10% to 20%. These countries announced subsequent retaliatory measures. The 25% tariff for Canada and Mexico were revised, though, such that all USMCA compliant goods from Canada (~38%) and Mexico (~50%) will be exempt from tariffs until April 2, according to CNBC.
Just about everything in the equity market participated in downside moves this week. Ten of the 11 S&P 500 sectors were lower with the financial (-5.9%), consumer discretionary (-5.4%), and energy (-3.8%) sectors logging the biggest declines.
Bonds and Treasuries
Sadly, Treasuries weren’t the safe haven we’d hoped for. They closed out the week with losses. The 10-year yield jumped nine basis points, settling at 4.32%, while the 2-year yield held steady at 4.00%.
US Markets
- Job Growth Slowdown: The job market seems to be catching a cold. Job growth cooled significantly in February. The Department of Labor reported 151,000 new payrolls, and ADP wasn’t much better, showing only 77,000 new private-sector jobs. Both numbers missed expectations, suggesting the labor market might be losing some steam.
- Chip Investment: Trump and TSMC are teaming up for a massive $100 billion investment to build five new chip plants in Arizona. This is a clear push to boost domestic production of advanced semiconductors and reduce reliance on foreign suppliers.
- Trade Deficit Surge: Our trade deficit is ballooning like a bad soufflé. It surged by 34% as imports jumped 10%, outpacing a meager 1% rise in exports. This decline in net exports isn’t a good sign for Q1 GDP. GDPNow is even projecting a -2.5% contraction.
- Layoff Announcements: Companies are wielding the axe. Layoff announcements hit their highest level since 2020, with 172,017 cuts in February—a staggering 245% jump.
- Ford Sales Drop: Ford is hitting a speed bump. Their sales dropped 9% in February. Demand for gas-powered vehicles fell 13%, despite a 23% rise in EV sales. The auto industry is bracing for the possible impact of Trump’s tariffs.
- Retailer Warnings: Retailers are waving red flags, signaling weakening consumer spending. Target reported soft February sales, Abercrombie issued weak guidance, and consumer confidence fell to its lowest point since 2021. All this is adding to existing economic concerns.
Global Markets
- Tariff Turmoil: Trump’s tariffs sparked global trade unease. He reinstated levies on Mexico, Canada, and China, leading to threats of retaliation. Later in the week, he delayed auto tariffs and tariffs on USMCA goods, adding to the uncertainty.
- ECB Rate Cut: The ECB cut rates to 2.5%, signaling a “less restrictive” policy. They warn of economic risks ahead and remain cautious about future cuts, opting for a data-driven approach.
- China’s Factory Growth: Factory activity in China saw its fastest growth in months, with February’s Caixin PMI jumping to 50.8.
- OPEC+ Output Hike: OPEC+ will increase oil output in April. They plan to hike oil production by 138,000 bpd but may adjust based on market conditions.
- Tesla’s China Sales Plunge: Tesla’s China-made EV sales plunged 49% in February amid competition from BYD and other local rivals.
- Europe Rearms: Europe is preparing to rearm amid fears of a U.S. pullback. Defense budgets are set to rise by €150B.
Commodities & Crypto Corner
Energy
Oil and Energy Markets: Oil prices took a nosedive, hitting their lowest levels of the year.
- West Texas Intermediate (WTI) crude fell to $67.86 per barrel, down 2% for the week.
- Brent crude dropped to $70.89 per barrel, declining 1.8%.
- Key factors included OPEC+’s plan to increase oil production, concerns over U.S. tariffs, and a smaller-than-expected decline in U.S. crude oil inventories.
Metals
Gold and Precious Metals: Gold prices declined slightly but remained near historically high levels.
- Gold ended the week at $2,849 per ounce, down 3%.
- The U.S. dollar strengthened significantly, putting pressure on gold prices.
Crypto
The cryptocurrency market experienced significant ups and downs.
- The U.S. government announced the creation of a Strategic Bitcoin Reserve, making it the largest sovereign holder of Bitcoin with 200,000 BTC.
- Bitcoin prices surged to $94,700 before retreating to $81,800.
- The crypto market also saw record outflows from investment products as investors reacted to shifting regulatory and economic conditions.
Key Events & Calendar
- Consumer Price Index (CPI): Investors will be glued to their screens awaiting Wednesday’s consumer price index (CPI) reading for February.
- Producer Price Index (PPI): Producer price inflation data for last month will be released on Thursday.
- Bank of Canada: The Bank of Canada will announce any changes to its monetary policy on Wednesday.
- European Union: The European Union will release industrial production data on Thursday.
Earnings
Here’s a quick look at some of the major firms reporting quarterly results this week. Get your popcorn ready!
- Monday, March 10: BioNTech (BNTX), Vail Resorts (MTN), Paymentus Holdings (PAY), Hesai Group (HSAI), and NET Power (NPWR).
- Tuesday, March 11: Ferguson Enterprises (FERG), Viking Holdings (VIK), DICK’S Sporting Goods (DKS), Ciena (CIEN), and Kohl’s (KSS).
- Wednesday, March 12: Adobe (ADBE), Crown Castle (CCI), UiPath (PATH), SentinelOne (S), and ABM Industries (ABM).
- Thursday, March 13: Ulta Beauty (ULTA), DocuSign (DOCU), Dollar General (DG), Futu Holdings (FUTU), and Rubrik (RBRK).
- Friday, March 14: Li Auto (LI).
