March 19th Market Overview

Happy Wednesday.

Markets punched back today with all indices up after the Fed stuck to its guns on rate cuts. Powell acknowledged the economic road has gotten bumpier but kept his cool when asked about tariffs heating up inflation.

Tech stocks – beaten down for weeks – finally caught a break as buyers stepped in. The market's still nursing its wounds, but today's rally suggests folks are still buying dips.

Let's dig in...

Executive Summary

• Fed maintains stance on two potential rate cuts in 2025 despite “increased uncertainty,” sending stocks higher
  

• Major indexes reclaim ground after recent correction territory sell-off
  

• Technology and Communication Services sectors outperform
  

• Tariff tensions continue with temporary exemptions for Canadian and Mexican imports set to expire April 2
  

• Economists warn of potential stagflation risks amid "policy fog" ahead of U.S. tariff implementation

Market Overview

Key Market Drivers

1. Fed Decision: The central bank kept rates unchanged at 4.25-4.50% while maintaining its forecast for two cuts this year, signaling confidence despite economic uncertainties
   

2. Powell’s Commentary: Fed Chair noted “the economy is strong overall” while downplaying long-term inflation impacts from tariffs
   

3. Trade Tensions: Ongoing concerns about Trump’s tariffs on goods from Canada, Mexico, and China, with retaliation already occurring
   

4. Market Rebound: Investors bought the dip following recent correction territory moves, though major indexes remain 6-11% below recent record highs
   

Stock Spotlight

$NVDA ( ▲ 1.35% ) : Up after CEO Jensen Huang unveiled next-generation AI chips at GTC conference. “Blackwell Ultra” family will launch in second half 2025, while “Vera Rubin” GPU ships in 2026. UBS added the stock to its “Global Top List,” citing an appealing entry point after recent declines.

$BA ( ▼ 2.36% ) : Shares jumped after CFO Brian West delivered optimistic commentary at a Bank of America investor conference, noting easing cash burn and improving factory operations. West stated “We think we’re off to a good start for the year” while dismissing immediate tariff concerns.

$ROKU ( ▼ 0.19% ) : Advanced despite Guggenheim lowering its price target to $100 from $115. Analysts maintained their buy rating, citing “high conviction that Roku will further improve engagement and economics in 2025” with management “laser focused on growing the financial contribution from 90mm+ streaming households.”

$WSM ( ▼ 1.63% ) : Dropped after issuing tepid guidance and disclosing a $49 million accounting adjustment related to over-reported freight expenses. The retailer expects revenue between -1.5% and 1.5% for the fiscal year ending January 2026.

Big Name Updates

$TSLA ( ▲ 0.7% ) : Upgraded to Overweight at Cantor with price target of $425, providing support for the recently struggling EV maker.

$META ( ▼ 1.87% ) : Fell into negative territory for 2025, becoming the final “Magnificent Seven” stock to slip into the red this year. Shares now down 0.5% year-to-date amid broader tech sector pressure.

$MS ( ▲ 1.22% ) : Plans to cut approximately 2,000 employees later this month according to Bloomberg News, with reductions expected across most divisions except financial advisors.

$GS ( ▲ 0.78% ) : Oppenheimer downgraded the stock to perform from outperform, citing lack of clear rebound in merger and acquisition activity.

Other Notable Company News

$KTOS ( ▼ 0.08% ) : Announced plans to build a $50 million hypersonic facility in Indiana, expanding defense capabilities.

$STNE ( ▲ 1.62% ) : Delivered strong Q4 results with EPS and revenue beating expectations, alongside upbeat 2025 profit outlook.

$PFE ( ▲ 1.45% ) : Raised $3.3 billion through sale of its Haleon stake, strengthening its balance sheet.

$GILD ( ▼ 0.77% ) : Shares declined after reports that the CDC’s HIV division review raised concerns about federal funding for domestic HIV prevention programs.

$LULU ( ▼ 1.59% ) : Raymond James reiterated outperform rating, noting “channel checks point to solid Y/Y growth” while maintaining $430 price target.

Sector Watch

Bond Market

• Treasury yields held steady following the Fed's decision to maintain interest rates at 4.25-4.50%

• Fed's projections expected to affect Treasury demand, with analysts noting potential impacts on the yield curve from the central bank's unchanged rate cut outlook

• Bond traders continue monitoring Powell's comments that tariff impacts on inflation would likely be only short-term, influencing near-term yield expectations

• LPL's Roach projects "core inflation should decelerate by the summer months," setting up favorable conditions for the Fed's anticipated June rate cut

Policy Watch

• Federal Reserve: The two-day policy meeting began today with markets pricing in a 99% probability that rates will remain unchanged. Chair Jerome Powell's commentary tomorrow will be crucial for shaping monetary policy expectations.
  

• Tariff Situation: Markets remain focused on President Trump's April 2 deadline regarding tariff exemptions for Canadian and Mexican imports.
  

• Economic Outlook: Treasury Secretary Scott Bessent reassured markets today, stating there is "no fundamental economic reason compelling a recession" despite recent investor concerns.
  

• Diplomatic Developments: President Trump is scheduled to speak with Russian President Putin today between 1300-1500 GMT. According to Kremlin sources, they will discuss "a wide range of topics."
  

What to Watch

1. Tariff Deadlines: Temporary exemptions on certain Canadian and Mexican imports expire April 2

   • Trade tensions could escalate if these exemptions aren’t extended

   • Watch for potential market volatility across sectors with international exposure
     

2. Bank of America Economic Projections: BofA CEO Moynihan indicated the bank expects growth to slow to approximately 2% this year

   • Inflation remains “stickier” due partly to tariff impacts

   • Financial sector reactions may indicate changing economic expectations
     

3. Artificial Intelligence Hardware Race: Following Nvidia’s announcements, monitor competitive responses

   • Blackwell Ultra chip family launches H2 2025 with Vera Rubin GPU in 2026

   • Tech sector performance may hinge on AI adoption acceleration or deceleration
     

4. Consumer Staples Sector Momentum: Wolfe Research highlighted the sector breaking out relative to S&P 500

   • After a two-year downtrend, technical analysis suggests potential strength

   • Could signal defensive positioning if economic uncertainty increases

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Thanks for reading 🙂

- John