The S&P 500 Index ($SPX) (SPY) Friday closed down -1.97%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -2.61%.  June E-mini S&P futures (ESM25) are down -2.18%, and June E-mini Nasdaq futures (NQM25) are down -2.89%. 

Stock indexes fell sharply on Friday, with the S&P 500 and Nasdaq 100 posting 2-week lows and the Dow Jones Industrials falling to a 1-week low.  Worries about the economic threat from tariffs pushed stocks and bond yields lower, and pushed gold to a new all-time high.  Friday’s economic news showed weaker-than-expected household demand and signs of sticky inflation after US Feb personal spending rose less than expected and the Feb core PCE price index, the Fed’s preferred inflation gauge, rose more than expected.

The University of Michigan’s report showed a downward revision in consumer sentiment to a 2-1/3 year low, and a rise in inflation expectations.  The broad market was led lower by weakness in Magnificent Seven stocks, chip makers, and travel stocks. 

According to Bank of America, EPFR Global data showed US stocks had $20.3 billion of outflows in the week to March 26, the largest weekly outflow this year.

Fed comments Thursday evening were also bearish for stocks after Boston Fed President Collins said that it looks “inevitable” that tariffs will boost inflation, at least in the near term.  Also, Richmond Fed President Barkin said rapid changes to US trade policy have created “a sense of instability” in the business community, and the associated decline in sentiment could “quiet demand.”

However, Friday’s comments from San Francisco Fed President Daly were dovish when she said the Fed could take its time to assess the impact of tariffs on the economy, and she still sees two 25 bp interest rate cuts this year by the Fed as a “reasonable” projection.

US Feb personal spending rose +0.4% m/m, slightly weaker than expectations of +0.5% m/m.  Feb personal income rose +0.8% m/m, stronger than expectations of +0.4% m/m and the largest increase in 13 months.

The US Feb core PCE price index rose +0.4% m/m and +2.8% y/y, slightly stronger than expectations of +0.3% m/m and +2.7% y/y.

The University of Michigan US Mar consumer sentiment index was revised downward by -0.9 to a 2-1/3 year low of 57.0, weaker than expectations of no change at 57.9.

The University of Michigan’s March US 1-year inflation expectations indicator was revised upward to a 2-1/3 year high of +5.0%, higher than expectations of +4.9%.  Also, the Mar 5-10 year inflation expectations indicator was revised upward to a 32-year high of 4.1% y/y, stronger than expectations of 3.9%.

Stocks have been under pressure over the past three weeks due to fears that US tariffs will weaken economic growth and corporate earnings. On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  On March 8, Mr. Trump reiterated that he would impose reciprocal tariffs and additional sector-specific tariffs on foreign nations on April 2.  On Wednesday, President Trump signed a proclamation to implement a 25% tariff on US auto imports, effective April 3.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  Mr. Trump said the tariffs were “permanent,” and he was not interested in negotiating any exceptions.

The markets are discounting the chances at 21% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Overseas stock markets today are lower.  The Euro Stoxx 50 fell to a 2-week low and closed down -0.92%.  China’s Shanghai Composite Index closed down -0.67%.  Japan’s Nikkei Stock 225 dropped to a 2-week low and closed down -1.80%.

Interest Rates

June 10-year T-notes (ZNM25) Friday closed up +25 ticks.  The 10-year T-note yield fell -9.9 bp to 4.261%.  June T-notes rallied Friday on carryover support from a rally in 10-year German bunds to a 3-week high.  Also, there was some supply relief after the conclusion of this week’s Treasury auctions of $211 billion of T-notes and floating rate notes.  Gains in T-notes accelerated Friday after stocks retreated on the news that the University of Michigan’s US consumer sentiment index was revised downward to a 2-1/3 year low.  Also, dovish comments from San Francisco Fed President Daly were bullish for T-notes when she said she still sees two 25 bp interest rate cuts this year by the Fed as a “reasonable” projection.

US economic news Friday was mixed for T-notes after Feb personal spending rose less than expected, but the Feb core PCE price index rose more than expected, and the University of Michigan US Mar inflation expectations indicator was revised higher.

European bond yields on Friday moved lower.  The 10-year German bund yield fell to a 3-week low of 2.707% and finished down -4.6 bp to 2.727%.  The 10-year UK gilt yield fell -8.9 bp to 4.694%.

The Eurozone Mar economic confidence index unexpectedly fell -1.1 to 95.2, weaker than expectations of an increase to 96.7.

The ECB’s Feb 1-year inflation expectations were unchanged from Jan at 2.6%, stronger than expectations of 2.5%.

German Mar unemployment rose by +26,000, showing a weaker labor market than expectations of +10,000.  The Mar unemployment rate unexpectedly rose +0.1 to a 4-1/2 year high of 6.3%, showing a weaker labor market than expectations of no change at 6.2%.

Swaps are discounting the chances at 85% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Friday’s selloff in the Magnificent Seven stocks was a bearish factor for the overall market.  Amazon.com (AMZN) closed down more than -4% to lead losers in the Dow Jones Industrials.  Also, Alphabet (GOOGL) and Meta Platforms (META) closed down more than -4%.  In addition, Tesla (TSLA) and Microsoft (MSFT) closed down more than -3%, Apple (AAPL) closed down more than -2%, and Nvidia (NVDA) closed down more than -1%.

Chip makers sold off Friday and weighed on the broader market. ON Semiconductor (ON) closed down more than -6% and NXP Semiconductors NV (NXPI) closed down more than -5%.  Also, Microchip Technology (MCHP), KLA Corp (KLAC), and Marvell Technology (MRVL) closed down more than -4%.  In addition, Intel (INTC), Analog Devices (ADI), Advanced Micro Devices (AMD), GlobalFoundries (GFS), Micron Technology (MU), Lam Research (LRCX), and Qualcomm (QCOM) closed down more than -3%.

Lululemon Athletica (LULU) closed down more than -14% to lead losers in the S&P 500 and Nasdaq 100 after forecasting 2026 net revenue of $11.15 billion to $11.30 billion, weaker than the consensus of $11.31 billion. 

Economic concerns undercut travel and hotel stocks Friday. Delta Air Lines (DAL), Las Vegas Sands (LVS), Royal Caribbean Cruises Ltd (RCL), Wynn Resorts Ltd (WYNN), Carnival (CCL), and United Airlines Holdings (UAL) closed down more than -4%.  Also, MGM Resorts International (MGM) and Norwegian Cruise Line Holdings (NCLH) closed down more than -3%.  In addition, Booking Holdings (BKNG) and Hilton Worldwide Holdings (HLT) closed down more than -2%.

Friday’s slump in the broader market and the decline in bond yields boosted defensive utility stocks.  American Electric Power (AEP), CenterPoint Energy (CNP), Edison International (EIX), FirstEnergy (FE), Eversource Energy (ES), Ameren (AEE), and Public Service Enterprise Group (PEG) closed up more than +1%.

Oxford Industries (OXM) closed down more than -5% after forecasting Q1 adjusted EPS of $1.70 to $1.90, well below the consensus of $2.73. 

Oracle (ORCL) closed down more than -3% and Leidos Holdings (LDOS) closed down more than -1% after the US Department of Defense said it would terminate a plan to use both companies’ software to manage its civilian workforce as part of the Pentagon’s cost-cutting efforts. 

WR Berkley (WRB) closed up more than +7% to lead gainers in the S&P 500 after Mitsui Sumitomo Insurance agreed to buy 15% of the company’s outstanding shares.

AppLovin (APP) closed up more than +4% to lead gainers in the Nasdaq 100 after Loop Capital Markets said the stock remains a top pick and would be “aggressive buyers” on weakness. 

AngloGold Ashanti Plc (AU) closed up more than +2% to lead gold mining stocks higher as the price of gold climbed to a new record high. 

Rocket Lab USA (RKLB) closed up more than +1% after it was selected by the US Space Force for a $5.6 billion program. 

Earnings Reports (3/31/2025)

Caledonia Mining Corp PLC (CMCL), Celcuity Inc (CELC), i-80 Gold Corp (IAU), LanzaTech Global Inc (LNZA), Loar Holdings Inc (LOAR), Maze Therapeutics Inc (MAZE), Nano-X Imaging Ltd (NNOX), Omeros Corp (OMER), Open Lending Corp (LPRO), Progress Software Corp (PRGS), PVH Corp (PVH), Rekor Systems Inc (REKR), Spire Global Inc (SPIR), TechTarget Inc (TTGT).