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RoboStreet – March 6, 2025
Over the past week, the U.S. stock market experienced heightened volatility as investors navigated escalating trade tensions, conflicting economic data, and a pivotal earnings season. The announcement of new tariffs on Canadian and Mexican imports sent shockwaves through the markets, fueling fears of retaliatory measures and disrupting investor sentiment. Meanwhile, economic reports painted a mixed picture—private-sector job growth sharply slowed, inflation pressures mounted, and manufacturing data signaled contraction—raising concerns about the Federal Reserve’s next policy move.
Amidst this backdrop, corporate earnings delivered a blend of optimism and caution, with key companies reporting strong performances in AI and technology, while retailers faced headwinds from rising costs. As a result, the major indices saw sharp fluctuations, with the S&P 500 briefly dipping below key technical levels before rebounding on a temporary delay in auto tariffs.
One of the most consequential events this week was the Trump administration’s decision to impose a 25% tariff on imports from Canada and Mexico, effective immediately. Additional threats of higher duties on Chinese goods further rattled markets, reviving fears of a prolonged trade war. The impact was swift and severe, with the S&P 500 experiencing its sharpest daily drop since mid-December on March 3. Investors rushed to reposition their portfolios, wiping out recent post-election gains.
And remember we’re not talking about day trading here. I’m looking for 50-100% gains within the next 3 months, so my weekly updates are timely enough for you to act.
By March 5, however, market sentiment shifted after President Trump announced a temporary one-month delay on auto tariffs. This move provided some relief to North American manufacturers, leading to a modest rebound in equities. The Dow Jones Industrial Average and the S&P 500 climbed over 1% in response, though the tech-heavy Nasdaq remained fragile, hovering near correction territory.
Trade-related uncertainty also impacted currency markets, with the euro surging to a four-month high against the U.S. dollar, which declined by 0.2% against the Chinese yuan. Meanwhile, Japan’s yen strengthened as investors flocked to safe-haven assets, putting additional pressure on U.S. exporters.
Economic data released this week added to the market’s turbulence. On March 5, the ADP employment report showed that private-sector payrolls increased by just 77,000 in February—far below expectations and marking the weakest job growth since July 2024. A slowdown in the services sector and adverse weather conditions across parts of the U.S. were cited as primary factors.
Manufacturing data released earlier in the week painted a similarly cautious picture. The ISM Manufacturing PMI signaled a contraction in factory activity, fueling concerns about broader economic deceleration. Inflation, however, remained a persistent worry. CPI and PPI data from late February indicated higher-than-expected price pressures, pushing long-term inflation expectations to decade highs.
In response to these developments, the Federal Reserve hinted at maintaining a cautious stance, with recent meeting minutes suggesting that rate cuts may be delayed. This shifted market expectations away from a dovish pivot, leading to a rise in Treasury yields. The 10-year yield remained volatile, oscillating between 3.6% and 4.8% before trending lower following the tariff announcements.
Despite these headwinds, weekly jobless claims fell by 21,000 to 221,000, indicating that the labor market remains relatively stable. However, planned layoffs surged to 172,017 in February, the highest since the onset of the pandemic, with federal government job cuts contributing significantly. The Commerce Department also reported that the U.S. trade deficit widened by 34% to a record $131.4 billion in January as businesses rushed to import goods ahead of tariff hikes.
Corporate earnings played a significant role in shaping market sentiment this week. While some companies posted strong results, others issued cautious guidance, highlighting the uneven impact of trade policies and inflationary pressures.
Among the notable reports:
The S&P 500 briefly fell below its 200-day moving average for the first time since November 2023, triggering broader concerns about technical support levels. Meanwhile, the Nasdaq Composite entered correction territory, dropping more than 10% from its recent highs. The Dow also posted steep losses earlier in the week before stabilizing following the tariff delay announcement.
Oil futures saw minor gains, fluctuating in response to trade policy developments and reports that the U.S. would tighten enforcement of sanctions on Iranian oil exports.
From a broader market perspective, volatility remains elevated, with the VIX at 24, signaling persistent investor caution. However, the S&P 500 has shown resilience, staging a late-session recovery on March 5.
Looking ahead, I remain in a market-neutral stance, given the sideways trading action in recent weeks. Inflation data is coming in largely as expected, and corporate earnings have been better than feared. However, risks remain elevated due to prolonged high interest rates and rising unemployment trends.
From a technical standpoint, the S&P 500 rally could extend to the $620–640 range, with short-term support at $560–580 over the next few months. While long-term trends remain intact, short-term market movement is likely to be choppy as investors weigh ongoing trade developments, Federal Reserve policy shifts, and the strength of the U.S. consumer. For reference, the SPY Seasonal Chart is shown below:
The past week has been a rollercoaster for investors, marked by trade policy uncertainty, slowing economic indicators, and an uneven earnings season. While markets showed resilience following the tariff delay announcement, sentiment remains fragile. Investors should brace for continued volatility as geopolitical risks, Federal Reserve decisions, and corporate earnings guidance dictate market direction in the coming weeks.
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And remember we’re not talking about day trading here. I’m looking for 50-100% gains within the next 3 months, so my weekly updates are timely enough for you to act.
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