March 12th Market Overview

Happy Wednesday.

Markets finally caught a break today. Cooler inflation = tech stocks ripping, with $NVDA leading. Just as things were looking up, Canada announced $20B in tariffs starting tomorrow. Classic 2025 market - can't have a rally without some trade drama. At least tech holdings stopped bleeding for the day.

Their is a bright side today - inflation seems to be cooling. We might get that rate cut after all!


Let's dig in...

Executive Summary

• Cooling inflation data (2.8% annual CPI) provided relief to markets after recent selling pressure
  

• Tech stocks staged a sharp comeback with semiconductor names leading the rebound
  

• Canada announced $20.7B in retaliatory tariffs starting tomorrow, following EU's $28B counter-measures
  

• Corporate developments like TSMC/Intel talks created isolated bright spots amid broader uncertainty
  

Market Overview

Key Market Drivers

1. Fed policy optimism grows: Both headline and core inflation metrics came in better than expected. Core CPI hit 3.1% annually, its lowest reading since April 2021, easing stagflation concerns and potentially giving the Fed more flexibility.
   

2. Trade conflict broadens: Following Trump's steel and aluminum tariff implementation, Canada announced $20B in retaliatory measures effective tomorrow while the EU targets $28B worth of U.S. goods starting April. Uncertainty over escalation paths is creating sector-specific volatility.
   

3. Tech's sharp reversal: Semiconductor stocks staged their strongest single-day performance since September 2024, with the VanEck Semiconductor ETF rising after three consecutive losing sessions.
   

4. Economic resilience signals: Despite market anxiety, current data shows consumers still spending and jobs remaining plentiful, with shelter costs cooling to a three-year low, suggesting a potential soft landing remains possible.

Stock Spotlight

• $NVDA ( ▲ 1.35% ) shares jumped after several weak sessions. The chipmaker had slumped in March and remains down year-to-date.

• $TSLA ( ▲ 0.7% ) up after tumbling on Monday for its biggest one-day loss since 2020. The stock gained momentum after President Trump signaled intent to buy one of the company’s vehicles.

• $INTC ( ▼ 2.27% ) climbed on a Reuters report that TSMC has approached Nvidia, AMD, and Broadcom about a joint venture to operate Intel’s foundry division.

• $GRPN ( ▲ 0.32% ) soared after issuing better-than-expected full-year revenue guidance of $493-500 million.

• $CROX ( ▼ 0.96% ) up after Loop Capital upgraded the stock to buy from hold, citing attractive valuation amid tariff uncertainty.

Big Name Updates

• $JPM ( ▼ 0.68% ) CEO Jamie Dimon warned that geopolitical risk represents the paramount concern for the free world, overshadowing economic considerations.

• $AAPL ( ▼ 0.19% ) shares fell after Morgan Stanley lowered its price target. Analyst Erik Woodring cited concerns that Siri delays will impact iPhone upgrade cycles.

• $WMT ( ▼ 0.8% ) dropped amid reports that its attempts to make Chinese suppliers absorb U.S. tariff costs are meeting resistance.

Other Notable Company News

• Roche is teaming with Zealand Pharma to develop petrelintide, an obesity treatment in a deal worth up to $5.3 billion. The news sent Zealand shares up while rival $NVO ( ▼ 2.38% ) fell.

• Airline stocks continued declining after warnings about weakening domestic travel demand. $DAL ( ▲ 1.32% ) , $UAL ( ▲ 1.99% ) , and $AAL ( ▲ 2.82% ) all posted significant losses.

• Consumer staples faced pressure as investors rotate out of defensive positions. $HSY ( ▼ 1.38% ) , $MDLZ, and $CPB ( ▼ 3.0% ) all declined.

Sector Watch

Bond Market

Treasury yields moved higher despite the softer inflation print, with the benchmark 10-year yield rising. The bond market continues to reflect heightened uncertainty around trade policy and its potential inflationary effects.

Policy Watch

Wolfe Research warns that more pain lies ahead: “We’ve never been believers in an easy, mechanical ‘Trump put.’ He is determined to use tariffs to restructure the global economy, and we think he’s a long way from done.”

Wells Fargo Investment Institute president Darrell Cronk advises investors to look for the “signal through the noise” of frequently changing tariff policies. Whatever the hell that means, I’m personally looking for value off these big sell offs.

What to Watch

1. CPI impact on Fed policy: Today’s softer inflation reading could restore some policy flexibility for the Federal Reserve.

   • Watch for comments from Fed officials interpreting the data

   • Monitor Treasury yields for market expectations about rate cuts
     

2. Escalating trade tensions: With retaliatory tariffs now announced by both Canada and the EU, watch for:

   • Additional countries announcing counter-measures

   • Potential adjustments to Trump’s tariff strategy
     

3. TSMC-Intel developments: The reported talks about a joint venture for Intel’s foundry could reshape the semiconductor landscape.

   • Watch for official statements from any of the companies involved

   • Monitor regulatory reactions, as any deal would need government approval
     

4. Earnings ahead: Adobe reports results after the close today.

   • Guidance will be closely watched for AI implementation progress

   • Subscription growth remains a key metric

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Thanks for reading 🙂

- John