March 20th Market Overview

Happy Thursday.

The bears refuse to hibernate as we close another tense session. Housing sales jumped 4.2% and manufacturing data surprised positively, creating an awkward contradiction for the markets to navigate.

Tesla's volume army keeps buying despite nine straight losing weeks, and the April 2nd "Liberation Day" tariff deadline approaches like a freight train. I think people are still in “buy the dip” mindsets.

Let's dig in...

Executive Summary

• Tariff Uncertainty Dominates: President Trump's April 2nd "Liberation Day" deadline for Canadian and Mexican import exemptions continues driving market caution.

• Investor Sentiment Near Historic Lows: AAII survey shows 58.1% bearish views, marking the first time in history that bearish sentiment remained above 57% for four consecutive weeks.

• Economic Resilience Signs: February existing home sales jumped 4.2% while Philadelphia manufacturing index outperformed forecasts, providing counterweight to recession fears.

• Tesla Paradox: Despite heading toward a ninth straight negative week, retail investors have poured an unprecedented $7.3 billion into $TSLA ( ▲ 0.7% ) over 12 consecutive sessions.

Market Overview

Key Market Drivers

1. Tariff Uncertainty: Goldman Sachs strategist Ben Snider notes markets will struggle finding direction until after April 2nd when several tariffs take effect, limiting near-term rally potential.
   

2. Fed Policy Outlook: The Fed forecasted two potential rate cuts in 2025 while raising its inflation outlook and lowering economic growth projections during yesterday's meeting.
   

3. Resilient Economic Data: February existing home sales rose 4.2% month-over-month, exceeding expectations, while Philadelphia's manufacturing index registered 12.5 for March, outperforming forecasts with hiring reaching its highest level since October 2022.
   

4. Record Bearish Sentiment: The latest AAII survey showed 58.1% bearish views, with nearly 75% of respondents expecting a recession this year - creating a contrarian indicator worth monitoring.
   

Stock Spotlight

$FIVE ( ▼ 1.4% ) jumped after the discount retailer beat fourth-quarter expectations with earnings of $3.48 per share versus $3.37 forecasted, while guiding Q1 and full year ahead of estimates.

$PRA ( ▼ 0.26% ) up on acquisition news as The Doctors Company announced it would purchase the insurer for $25 per share, representing a 60% premium.

$JBL ( ▲ 1.23% ) advanced following strong fiscal second-quarter results that topped analyst expectations, with adjusted earnings reaching $1.94 per share on $6.73 billion revenue.

$ACN ( ▼ 0.39% ) dropped after the consulting giant reported lackluster fiscal second-quarter results that disappointed investors despite technically meeting analyst expectations.

$MSGS ( ▲ 1.17% ) gained over after the Boston Celtics sold for $6.1 billion to an investor group led by William Chisholm, raising valuation benchmarks for NBA franchises.

Big Name Updates

$TSLA ( ▲ 0.7% ) faces mounting challenges as Baird reiterated its "bearish fresh pick" rating, citing both supply and demand concerns. Despite extending its record losing streak toward nine consecutive negative weeks, retail investors have poured in $7.3 billion over 12 consecutive buying sessions according to JPMorgan - the highest magnitude buying streak in over a decade.

$AAPL ( ▼ 0.19% ) is reshuffling its AI executive leadership, with Vision Pro creator Mike Rockwell taking over as AI head, replacing John Giannandrea. The move aims to bolster the company's Siri virtual assistant and broader AI initiatives.

$NVDA ( ▲ 1.35% ) is hosting its first-ever "Quantum Day" at its GPU Technology Conference today, where CEO Jensen Huang will discuss quantum computing potential with industry executives. According to the Financial Times, Nvidia plans to spend "hundreds of billions" on U.S. chipmaking over the next four years.

$GM ( ▼ 1.33% ) and Hyundai Motor are approaching a deal for the South Korean automaker to share electric commercial van models with the U.S. manufacturer, with potential for GM to provide Hyundai with pickup trucks to sell through its own brand.

Other Notable Company News

$WMT ( ▼ 0.8% ) received an endorsement from Bernstein analyst Zhihan Ma, who called the retail giant a "structural winner" in e-commerce, citing its scale and investment in automation capabilities that support improved profitability.

$IONQ ( ▲ 0.2% ) announced its quantum computing system outperformed classical computing for the first time in real-world engineering, helping Ansys speed up medical device simulations by 12%.

$FCX ( ▼ 0.69% ) got upgraded to overweight by JPMorgan, which raised its price target to $52 from $48, noting that "tariff risk is likely to maintain premium pricing for the company's US-based footprint."

$KKR ( ▲ 1.07% ) received an upgrade from Wells Fargo to overweight from neutral, with analyst Michael Brown stating the "upside potential is too compelling to pass up."

SoftBank announced it will acquire chip designer Ampere Computing in a $6.5 billion deal expected to close in the second half of 2025.

Sector Watch

Bond Market

The Fed meeting revealed two key developments:

• Officials projected two potential rate cuts for 2025 while keeping current rates unchanged

• The central bank raised its inflation outlook while lowering economic growth projections

Fed Chair Powell specifically highlighted tariffs as a growing concern for consumer sentiment and economic stability.

Traders now expect a holding pattern on rates until the Fed can properly assess President Trump's tariff implementation impact.

Policy Watch

April 2nd marks the expiration of tariff exemptions on select Canadian and Mexican imports. President Trump has dubbed this date "Liberation Day in America."

Trump directly urged the Federal Reserve to cut rates as tariffs transition into the economy, telling officials to "Do the right thing."

Meanwhile, Wells Fargo Investment Institute offers a contrarian perspective:

• Tariffs are "very unlikely" to push the U.S. economy into recession

• The current market pullback represents a buying opportunity for investors
  

What to Watch

1. Tesla's Retail Investor Dynamics:

   • Despite heading toward a ninth consecutive negative week, retail investors have poured $7.3 billion into $TSLA over 12 straight sessions

   • Monitor whether this unprecedented retail support creates a floor or if institutional selling pressure continues

   • Watch for any updates on the planned Cybertruck battery innovation that could address manufacturing costs
     

2. Nvidia's Chipmaking Investment:

   • Track developments following the FT report of "hundreds of billions" planned investment in U.S. chipmaking

   • Watch for specific facility announcements and their impact on semiconductor supply chain stocks

   • Note any comments from today's "Quantum Day" event that might affect quantum computing stocks like $IONQ ( ▲ 0.2% ) 
     

3. Contrarian Sentiment Indicators:

   • The AAII survey showing 58.1% bearish views marks unprecedented pessimism, historically a potential buying signal

   • Watch if the Russell 2000 "death cross" plays out as it has historically, with positive returns in 80% of past cases

   • Monitor institutional positioning shifts as companies like Wells Fargo Investment Institute move funds from bonds to stocks

P.S. 
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Thanks for reading 🙂

- John