The S&P 500 Index ($SPX) (SPY) on Monday fell -0.29%, the Dow Jones Industrials Index ($DOWI) (DIA) rose +0.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -0.92%. March E-mini S&P futures (ESH25) fell -0.41%, and March E-mini Nasdaq futures (NQH25) fell -1.11%.
The broad market and tech stocks fell Monday, adding to last Friday’s sharp losses of -1.71% in the S&P 500 index and -2.06% in the Nasdaq 100 index. Stocks were undercut last Friday by negative US economic news, led by the decline in the University of Michigan’s US Feb consumer sentiment index to a 15-month low of 64.7. Also, the University of Michigan’s US Feb 5-10 year inflation expectations indicator rose to a 29-year high of +3.5%.
Stocks were undercut Monday by losses in most of the Magnificent Seven stocks, led by Nvidia, Meta, Tesla, and Microsoft. The stock market had some underlying support as the 10-year T-note yield fell by -3 bp.
The Trump administration launched fresh measures against China. The administration proposed fees on the use of commercial ships made in China, which caused Chinese shipping stocks to fall on Monday. President Trump also issued a memorandum to the US Committee on Foreign Investment in the US instructing the Committee to limit China’s ability to invest in key US sectors such as technology, food, farmland, minerals, natural resources, ports, and shipping terminals.
President Trump on Monday afternoon, at a joint press conference with French President Macron, said that US tariffs on imports from Mexico and Canada will go ahead “on time, on schedule.” Mr. Trump delayed the tariffs by a month until March 4 despite new border measures implemented by both Canada and Mexico. Mr. Trump on Monday also said he plans to go ahead with the “reciprocal tariffs” that he previously said would be ready by April 1.
Stock investors are looking ahead to Nvidia’s earnings report after Wednesday’s close. This week’s US economic calendar is also busy. Tuesday’s Feb Conference Board US consumer confidence index is expected to show a -1.4 point decline to 102.7. Thursday’s US Q4 GDP report is expected to show an increase of +2.3% (q/q annualized), with a +4.1% increase in personal consumption. Friday’s Jan PCE price index report, the Fed’s preferred inflation measure, is expected to ease slightly to +2.5% y/y from December’s +2.6%, and the core index is expected to ease to +2.6% y/y from December’s +2.8%.
The markets are discounting the chances at 3% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
The German Dax stock index rose +0.62% on Monday after the conservative Christian Democrat party, led by Friedrich Merz, won a plurality in Sunday’s German election, beating the far-right Alternative for Germany (AfD) party. However, the centrist parties are expected to have difficulty building a ruling coalition.
Overseas stock markets on Monday were mixed. The Euro Stoxx 50 closed down -0.39%. China’s Shanghai Composite Index closed down -0.18%. Japan’s Nikkei Stock 225 closed up +0.26%.
Interest Rates
March 10-year T-notes (ZNH25) on Monday rose by +6 ticks. The 10-year T-note yield fell by -3.3 bp to 4.398%. March T-note prices saw support from safe-haven demand after stocks turned lower. However, T-note prices were undercut by supply overhang as the Treasury sold $69 billion of 2-year T-notes on Monday. The Treasury will sell $70 billion of 5-year T-notes on Tuesday, and $28 billion of floating-rate 2-year T-notes and $44 billion of 7-year T-notes on Wednesday.
European bond yields were mixed on Monday. The 10-year German bund yield rose +0.8 bp to 2.477%. The 10-year UK gilt yield fell by -0.7 bp to 4.564%.
Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Most of the Magnificent Seven stocks closed lower on Monday, with only Alphabet and Apple showing increases. Nvidia (NVDA) fell about -3% and was the largest loser among the Magnificent Seven ahead of its earnings report on Wednesday. Nvidia dragged down other chip stocks, with Marvell Technology (MRVL) falling more than -5%. Broadcom (AVGO) fell more than -4%. Micron Technology (MU) and Lam Research (LRCX) fell more than -3%.
Meta (META) fell -2.5% on Monday, adding to last week’s -7% decline and posting a new 1-month low.
Tesla (TSLA) fell -2.2% despite Bloomberg’s report that the company will soon issue a software update for Chinese customers that offers increased driver-assistance capabilities.
Microsoft (MSFT) fell about -1% after a report by TD Cowan that Microsoft has canceled some leases for US data center capacity, raising questions about whether it has secured too much capacity or that Microsoft might be less optimistic about AI demand.
Apple (AAPL) rose +0.86% after saying it will hire 20,000 new employees in the US and invest in “American innovation,” spending at least $500 billion in the US over the next four years. Apple said it will open a manufacturing plant in Houston to build AI servers.
Palantir Technologies (PLTR) fell more than -10% on Monday, adding to last week’s -15% drop, as concern continues about cuts in US defense spending.
Berkshire Hathaway (BRK.B) rose more than +4% on an earnings surge in Q4, driven in part by a large increase in insurance underwriting.
Nike (NKE) rose more than +5% on a rating upgrade by Jefferies to buy, which said Nike is poised for a strong recovery in coming quarters.
Domino’s Pizza Inc. (DPZ) fell -1.5% on news of disappointing Q4 sales as US consumers curb their spending.
Robinhood Markets (HOOD) fell more than -3% even though the company said the SEC closed its crypto investigation without any action.
Earnings Reports (2/25/2025)
Home Depot Inc (HD), Keurig Dr Pepper Inc (KDP), Henry Schein Inc (HSIC), Pinnacle West Capital Corp (PNW), Public Service Enterprise Grou (PEG), American Tower Corp (AMT), Sempra (SRE), Caesars Entertainment Inc (CZR), Extra Space Storage Inc (EXR), First Solar Inc (FSLR), Axon Enterprise Inc (AXON), Intuit Inc (INTU), Keysight Technologies Inc (KEYS), Workday Inc (WDAY).
