March 11th Market Overview

Happy Tuesday.

Markets struggled to find direction today as new trade tensions with Canada emerged and travel stocks took a significant hit. On the bright side, Ukraine reportedly has agreed to a U.S.-negotiated ceasefire plan. I think this could bring some much needed positive market sentiment if these plans follow through.


Let's dig in...

Executive Summary

• S&P 500 briefly touched correction territory before rebounding, now sitting 9.5%ish below February's record high
  

• President Trump's announced doubled Canadian steel and aluminum tariffs
  

• Travel stocks led declines after multiple airlines cut guidance
  

• Tech sector provided support, helping the Nasdaq finish positive despite market turbulence (mainly TSLA and NVDA propping the Q’s up today)

  
  

Market Overview

Key Market Drivers

1. Trade Policy Uncertainty: Disorderly trade policy moves including the Canadian tariff announcement have stoked headline fears of tipping the U.S. economy into recession
   

2. Deteriorating Business Sentiment: NFIB Small Business Optimism Index showed uncertainty near record highs, with the share of owners expecting economic improvement dropping 10 points
   

3. Consumer Spending Concerns: Weakening travel demand signals potential broader consumer pullback, with multiple companies citing macroeconomic uncertainty
   

4. Rising Recession Odds: JPMorgan and Wolfe Research both raised recession probabilities, with Wolfe citing "earlier-than-anticipated tariff policy" and "immense policy uncertainty"

Stock Spotlight

• $TSLA ( ▲ 0.7% ) : Shares rebounded after President Trump announced plans to “buy a brand new Tesla tomorrow morning.” Wedbush maintained its outperform rating with a $550 price target, calling this a “moment of truth” for Musk who has been “missing from his leadership as he continues to focus his energy on DOGE”
  

• $META ( ▼ 1.87% ) : Testing its first AI training chip with TSMC, aiming to reduce reliance on $NVDA ( ▲ 1.35% ) and cut AI infrastructure costs with a dedicated accelerator designed specifically for AI tasks
  

• $KSS ( ▼ 3.84% ) : Kohl’s suffered its worst day on record after issuing disappointing guidance for 2025, despite topping Q4 earnings and revenue estimates
  

• $LUV ( ▲ 0.98% ) : Southwest Airlines surged after announcing it will begin charging customers for checked bags and introduce a basic economy fare, marking a significant strategic shift for the carrier

Big Name Updates

• $ORCL ( ▼ 0.52% ) : Reported mixed earnings with adjusted EPS of $1.47 (vs. $1.49 est.) and revenue of $14.13B (vs. $14.39B est.). Cloud revenue grew 23% YoY, and the company announced a 25% dividend increase to $0.50 per share. BofA lowered their price target to $175 from $195
  

• $DAL ( ▲ 1.32% ) : Slashed its Q1 earnings outlook to $0.30-$0.50 per share from $0.70-$1.00 and cut revenue growth projections to 3-4% from 7-9%, citing weakening domestic demand and economic uncertainty
  

• $AAL ( ▲ 2.82% ) : Now expects a Q1 adjusted loss of $0.60-$0.80 per share, worse than its prior forecast of $0.20-$0.40, citing tariff pressures and government spending uncertainties
  

• $VZ ( ▲ 0.41% ) : Warned that wireless subscriber growth will soften in Q1 due to competitors’ off-season promotions, stating that gross adds this quarter will “probably be soft”

Other Notable Company News

• $COIN ( ▼ 0.57% ) : Coinbase received FIU approval to operate in India and plans to roll out its retail trading platform later this year, despite India’s 30% crypto tax
  

• $RKLB ( ▲ 10.14% ) : Rocket Lab scheduled two launches just three days apart, including a mission to deploy the final satellites in the Kinéis constellation
  

• $ASAN ( ▲ 0.9% ) : KeyBanc maintained its sector weight rating, noting that margin improvements haven’t driven expected revenue acceleration. After hours, CEO Dustin Moskovitz announced his retirement
  

• $HIMS ( ▲ 4.06% ) : Citi issued a sell rating with a $27 price target, calling an appeal “highly unlikely to change the outcome”
  

• $UAL ( ▲ 1.99% ) : Reported seeing a 50% drop in government-related travel, signaling broader weakness in demand
  

Sector Watch

Bond Market

The Japanese 10-year government bond yield jumped to 1.6%, its highest level since the 2008 Global Financial Crisis. U.S. Treasury yields rose after yesterday's safety-driven rally, with the benchmark 10-year yield climbing back to 4.276%. Bond market movements reflect growing economic uncertainty, with flight-to-safety trades temporarily reversing.

Policy Watch

Treasury Secretary Scott Bessent warned of a potential "detox period" for the economy as the administration slashes federal spending. The House of Representatives plans a vote today on a stopgap funding bill to avoid a government shutdown this weekend. Market sentiment received a modest boost from news that Ukraine has agreed to a U.S.-negotiated ceasefire plan.

What to Watch

1. CPI Data Release Tomorrow:

   • February’s Consumer Price Index will be critical for gauging inflation trends

   • Any upside surprise could limit the Fed’s ability to cut rates if economic conditions worsen

   • Analysts will focus on core services inflation excluding housing

2. Potential Government Shutdown:

   • House vote on stopgap funding bill planned for today

   • Shutdown would add another layer of uncertainty to markets already dealing with trade tensions

   • Could impact economic data releases and government-related businesses

3. Airline Earnings and Guidance:

   • Watch for further guidance cuts from other major carriers following $DAL's warning

   • Travel demand weakness could spread to adjacent sectors like hotels and booking platforms

   • May provide early signals about broader consumer spending patterns

4. Hang Seng vs. S&P 500 Performance:

   • Hang Seng Index is outperforming the S&P 500 by the widest margin since 2007

   • Citi has downgraded U.S. stocks while upgrading China to overweight

   • This rotation could accelerate if U.S. recession fears continue to build

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Thanks for reading 🙂

- John