Equity Market Performance
U.S. equity markets declined on Tuesday but closed above session lows, as trade tensions and economic uncertainty continued to weigh on sentiment. The Dow Jones Industrial Average dropped over 1%, the S&P 500 fell 0.75%, and the Nasdaq lost 0.2%. The market downturn followed President Trump’s decision to raise tariffs on Canadian steel and aluminum imports to 50% in response to Ontario’s new electricity surcharge, which was later temporarily suspended after renewed trade discussions.
In the bond market, yields rose slightly, with the 10-year U.S. Treasury yield near 4.28%, while the two-year yield dropped to its lowest level since October 2024. This reflects growing expectations of two or three Federal Reserve interest rate cuts this year. The U.S. dollar extended its decline against major currencies, while WTI crude oil prices increased amid concerns over potential supply disruptions.
Global markets also struggled, with Asian equities declining after Japan failed to secure exemptions from U.S. tariffs, and European stocks dropping, led by losses in travel, leisure, and healthcare sectors.
Market Sentiment and Economic Concerns
Investor sentiment remained fragile as conflicting updates on trade policy increased fears of a recession. The S&P 500 briefly entered correction territory, now down nearly 3.5% over the past two sessions, marking its sharpest decline since August.
The administration’s focus on long-term trade restructuring over short-term economic stimulus has contributed to consumer and business hesitation, further pressuring markets. Adding to bearish sentiment, Citigroup downgraded its outlook on U.S. equities to “neutral.”
Several major stocks saw steep losses:
- Kohl’s shares plunged over 24% following a bleak sales forecast.
- Dick’s Sporting Goods dropped more than 5.5% after issuing weak annual guidance.
- Airline stocks fell sharply, with American Airlines down over 8% and Delta losing more than 7% after disappointing Q1 revenue projections.
Global Market Developments
Asian Markets
Asian markets showed mixed performance on Wednesday. Equities in Australia and Malaysia led losses due to ongoing trade uncertainties, while South Korean shares rebounded, driven by gains in the tech sector. Most other Asian markets, including China and the Philippines, traded lower, with Australia’s S&P/ASX 200 briefly entering correction territory.
European Markets
European equities extended their declines on Tuesday:
- STOXX 50 dropped 1.7%
- STOXX 600 declined 1.8%
U.S. trade tensions continued to weigh on sentiment, with notable losses among major companies:
- BNP Paribas, UniCredit, BASF, and Air Liquide each fell 3%.
- Automakers experienced heavy losses, with Stellantis, Mercedes-Benz, and Volkswagen declining.
- Stellantis dropped 5% due to a sharp decline in profits, primarily driven by U.S. tariffs.
Currencies and Commodities
The U.S. dollar index remained near 103.5, its lowest level in five months, as the euro strengthened to 1.0902 against the greenback. The dollar faced downward pressure due to:
- Hopes of a ceasefire in Ukraine
- Uncertainty surrounding U.S. trade policies
- Inflation and economic slowdown concerns
Oil prices rebounded slightly, recovering from three-year lows, as traders monitored:
- Ongoing U.S. trade tariff risks
- Potential supply disruptions from Russia
- Canada’s threats to reduce oil exports to the U.S.
- A potential increase in U.S. crude inventories
- OPEC’s upcoming monthly oil market report
Stock Market Movers
Several companies experienced notable price movements due to earnings reports, analyst ratings, or broader industry developments:
Telecom Industry
- Verizon Communications warned of weaker-than-expected Q1 wireless subscriber growth, citing aggressive promotions by competitors.
- Verizon’s stock fell over 7%, sparking a broader decline in the telecom sector.
- AT&T and T-Mobile also dropped, though Verizon and AT&T downplayed concerns over competition from satellite internet providers.
Airline Industry Struggles
- American Airlines plunged over 8% after cutting its Q1 2025 revenue outlook and predicting a larger-than-expected loss.
- The airline now expects an adjusted loss of $0.60 to $0.80 per share, citing weak domestic leisure travel demand.
Retail Sector
- Dick’s Sporting Goods reported strong Q4 earnings, with comparable store sales rising 6.4% year-over-year.
- Despite the positive results, shares fell 5.7% due to a cautious FY2025 outlook.
- The company announced:
- Expansion plans for new stores
- A dividend increase
- A $3 billion share buyback program
Semiconductor Industry Developments
- TSMC proposed a joint venture with Nvidia, AMD, Broadcom, and Qualcomm to help operate Intel’s U.S. foundries.
- TSMC would hold no more than 50% of the venture, aligning with its goal of expanding U.S. chip production.
Tesla’s Expansion Plans
- Elon Musk announced plans to double Tesla’s U.S. vehicle production over the next two years.
- The announcement follows President Trump’s public purchase of a Tesla and his decision to classify violence against Tesla dealerships as domestic terrorism.
- Despite expansion efforts, Tesla faces several challenges, including:
- Declining sales
- Protests
- A falling stock price
- Musk confirmed he will continue advising Trump.
Microsoft’s AI Growth
- Microsoft reported strong AI-driven demand, particularly within its Azure cloud platform.
- While capital expenditures have slowed, the company remains optimistic about AI adoption and future revenue growth.
- Microsoft 365 Copilot adoption continues to expand, reinforcing Azure’s long-term market potential.
Boeing’s Aircraft Deliveries
- Boeing delivered 44 aircraft in February, up from 27 in the same month last year.
- However, net orders for February totaled just 5, bringing year-to-date net orders to 41, compared to Airbus’s 65.
Unilever’s Portfolio Restructuring
- Unilever plans to sell €1 billion in European food brands and €500 million in smaller markets, focusing on strengthening its most profitable divisions.
Uber Terminates Foodpanda Taiwan Deal
- Uber canceled its planned acquisition of Delivery Hero’s Foodpanda business in Taiwan.
- The deal was blocked due to antitrust concerns, and Uber will pay a $250 million termination fee.
Reddit’s Stock Decline
- Reddit shares have dropped 50% in the past month, but Loop Capital maintained a “Buy” rating with a $210 price target.
- Analysts expect revenue growth driven by increased ad monetization, including improvements in ad load.
Goldman Sachs Lowers S&P 500 Target
- Goldman Sachs cut its 2025-end target for the S&P 500 to 6,200, citing:
- Heightened policy uncertainty
- Concerns over economic growth
- A 14% decline in the “Magnificent 7” stocks, which weighed on the broader index.
Upcoming Data and Events
- U.S. Consumer Price Index (CPI) for February
- EIA Crude Oil Inventories Report
- Earnings reports from Adobe, Dollar Tree, Inditex, and Porsche
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