Closing Recap

Monday, March 31, 2025

U.S. stocks were down most of morning before rebounding to end the day mixed, closing out a brutal March that saw big declines for major averages on tariff impact fears, slowing consumer spending fears on the economy and technical breakdowns. The Nasdaq 100 (NDX) is down about ~8% in March (worst month since Dec’22), and down ~8% on the quarter (worst quarter since 2Q’22). The Nasdaq Composite is down -10.3% in the quarter after a -9.35% decline in March. The S&P 500 index is down 5% YTD after a -6.6% decline in March. The weakness today comes ahead of President Trump’s first Rose Garden event of his second term on April 3rd to announce his reciprocal tariff plans on trading partners and key monthly jobs data all week (JOLTS tomorrow, ADP private payrolls Wednesday and Nonfarm Payrolls on Friday).

Several factors along with market uncertainty for tariffs on the economy have weighed on the tech trade to kick of 2025 (after back-to-back stellar years) including diminished confidence in near-term earnings, IT spending concerns (ACN, DOGE impact, etc.), loss of momentum in the GenAI narrative, high-level themes like Europe bringing investment money back home, as well as weak consumer datapoints (the latest Virgin Atlantic Airways CEO said we “have started to see some signals that US demand is slowing in last few weeks”) hitting Mega cap in Tech.

Weakness overseas as well on global tariff impact uncertainty as Europe’s Stoxx 600 dropped -1.47% to its lowest since Feb 4, Britain’s FTSE 100 was down -0.87%; Germany’s DAX fell -1.33% and France’s CAC 40 declined -1.55%. In Asia, the Nikkei Index tumbled -1,500 points or 4% to settle at 35,617, the Shanghai Index dropped -15 points to 3,335, and the Hang Seng Index fell -152 points to 23,426

Goldman Sachs Group Inc.’s David Kostin cut his S&P 500 target for a second time this month as the strategist now expects the benchmark to end the year around 5,700 points versus his previous estimate of 6,200, citing a higher recession risk and tariff-related uncertainty. The new target implies gains of just 2% from Friday’s close and is among the lowest on Wall Street. Higher tariffs and weaker growth reduce their earnings estimates and S&P 500 return forecasts. Cut our S&P 500 EPS growth forecasts to +3% in 2025 (from +7%) and +6% in 2026 (from +7%). Our new EPS estimates are $253 and $269, respectively.

In stock news: Biotech (XBI, IBB) tumbled following news of a key departure this weekend at the FDA. Dr. Peter Marks, the Director of the Center for Biologics Evaluation and Research (CBER) at the FDA was seen as a negative surprise to Wall Street. Shares of vaccine makers (MRNA, BNTX, NVAX) weak as other gene-therapy companies fell. Ongoing weakness in shares of companies connected to artificial intelligence (AI) fell again as investors increasingly questioned the outlook for the sector, which has been a central driver of overall market gains prior. Shares of NVDA, ARM, AVGO in chips, SMCI, VRT, DELL, ETN in data center, GOOGL, MSFT weaker. Travel and consumer related stocks were broadly lower following global stock pressure amid intensifying worries about the impact of US tariffs. The uncertainty is seen as weighing on consumers, and travel & leisure stocks were hit early Monday with airlines (AAL, DAL, UAL), cruise lines (CCL, NCLH, RCL), online travel/lodging (ABNB, EXPE, BKNG) all tumbling early.

• Dallas Fed Texas manufacturing index of general business activity -16.3 in March vs -8.3 in February; Dallas Fed Texas manufacturing output index 6.0 in March vs -9.1 in February.
• In China, the official PMI survey for March slightly exceeded market expectations as manufacturing PMI increased to 50.5, compared to the estimated 50.4 and the previous figure of 50.2. Meanwhile, the non-manufacturing index rose to 50.8, surpassing the estimate of 50.6 and the prior reading of 50.4. This marks the second consecutive improvement for the manufacturing index.
• Japan’s industrial production rebounded in February, marking its fastest monthly gain in nearly a year, as manufacturers ramped up output ahead of new U.S. tariffs on autos and auto parts. Industrial production rose 2.5% MoM (est. 2.0%, prev. -1.1%), but missed expectations YoY at 0.3% (est. 1.2%, prev. 2.2%).

• Oil prices were strong all day as WTI crude gained $2.12 or 3.06% to settle at $71.48 per barrel to settle around 5-week highs on tariff related supply worries, President Donald Trump threats to impose more tariffs on Russia and harsh comments on Iran. President Donald Trump said he was “very angry” with Vladimir Putin and threatened secondary tariffs on buyers of his country’s oil if the Russian leader refuses a ceasefire with Ukraine. He later added that he didn’t think the Russian president would “go back on his word.” Trump also threatened Iran on Sunday with bombing and secondary tariffs if Tehran did not come to an agreement with Washington over its nuclear program. Front month Nymex crude dipped -0.33% this quarter.

• Monthly electric vehicle (EV) delivery data is expected this week from likes of TSLA, and Chinese EVs LI, NIO, XPEV and BYDDF.  In EV Charging: CHPT was downgraded to In Line from Outperform at Evercore and cut tgt to $1 from $4, following a transfer of coverage as sees more commoditization risk with free cash flow burn for ChargePoint. The firm lowered its target on EVGO to $4 from $7 and keeps an Outperform rating calling it one of the leading providers of direct current fast charging in the U.S., operating over 4,000 charging stalls. In tires, GT was upgraded to Buy from Hold at Deutsche Bank with a $13 price target.

• In Food & Beverages: Food stocks (CPB, GIS, CAG, HSY, UTZ) saw early gains while stocks were tumbling amid a rotation into more defense asset classes; CELH was upgraded to Buy from Hold at Truist and raised tgt to $45 from $35 saying the market is already looking past the hiccups of the legacy business in 2024 and the brand’s slowdown in Q125.
• In Restaurants: WING was upgraded to Buy from Hold at Jefferies with a price target of $270 saying it sees shares as oversold with a valuation now overly discounting Wingstop’s higher unit and EBITDA growth versus peers and says the company’s same-store-sales moderation is now well understood.

• In Media: NMAX shares surged over 667% to highs above $75 after opening at $14, as the news company sold 7.5 million shares to raise $75 million in its offering under Regulation A+, or a "mini-IPO", which is a scaled down version of the traditional IPO.

• In Metals & Mining: in the Steel sector, U.S. Steel (X) was downgraded to Market Perform from Outperform at BMO Capital saying the current share price nearing fair fundamental value while upgraded STLD to Outperform saying the company’s product portfolio is relatively well-positioned to benefit from President Donald Trump’s expanded tariffs. Gold and silver miners (AEM, NEM, GFI, GOLD, PAAS) continue uptrend following surge in gold prices to new all-time highs. AEM was downgraded to neutral at UBS following outperformance, though remain constructive on the outlook for gold and in our view the role of gold/gold equities as a diversifier in portfolios remains compelling.

• In Consumer Finance: The Dept. of Justice is considering approving COF’s planned $35.3B purchase of DFS as the regulator believes it may not be able to block the deal in a court based on issues with subprime lenders. The deal-spread narrowed to $13.92 from $18.84 on Friday.  https://tinyurl.com/48wk28y6
• In Mortgage Industry: RKT announced a definitive agreement to acquire COOP in an all-stock transaction for $9.4B in equity value, where under the terms of the agreement, Mr. Cooper shareholders will receive a fixed exchange ratio of 11.0 Rocket shares for each share of Mr. Cooper common stock valued at $143.33.
• In Insurers/Brokers: LPLA said it would acquire Commonwealth Financial Network which supports ~2,900 independent advisors managing ~$285B in assets for about $2.7B in cash; AIG shares jumped following news of a $7.5B share buyback authorization.
• In Crypto: HUT shares outperformed in Bitcoin miners on news it has teamed up with Eric Trump to form American Bitcoin with a focus on mining and building bitcoin reserves. The co says it merged the majority of its mining operations for an 80% stake in American Data Centers, backed by investors including Eric Trump and Donald Trump Jr., rebranded as American Bitcoin. MSTR acquired an additional 22,048 BTC for approximately $1.92B at an average price of $86,969 per bitcoin between March 24 and March 30, according to an 8-K filing with the SEC; MARA files to offer up to $2 billion in common stock.

• RFK Jr announced he is doubling HHS layoffs from 10,000 to 20,000, consolidating 28 divisions to 15 and renaming the agency the Administration for Healthy America (AHA).
• BNTX, MRNA, NVAX, PCVX shares among vaccine names that were pressured on FDA Marks departure.
• EBS announces a $50M buyback program.
• SRPT shares fall after RBC Capital downgraded to Sector Perform from Outperform (PT to $87 from $161) saying they are incrementally less bullish on Elevidys’ opportunity following recent physician checks; also impacting shares potentially was the news that Peter Marks, a top official at the U.S. FDA, has been pushed out of the agency. Marks was the head of FDA’s Center for Biologics Evaluation and Research (CBER).
• In MedTech: IART upgraded to Buy from Hold at Argus with $28 PT as sees the company well positioned for a turnaround and says with supply issues for Integra Skin products resolved, the company now sees sequentially stronger top- and bottom-line growth as 2025 progresses. WAT was upgraded to Overweight at Keybanc with $460 tgt on increased confidence that the Company’s exposure to pharma/biotech manufacturing can drive outperformance relative to peers

• In Semiconductors: the sector remains pressured on slowing AI spending concerns (after CRWV disappointing IPO debut last week, pullback in spending by some); AMD files for offering up to 9.1M shares of common stock by the selling stockholders; KLAC was upgraded to Overweight from EW at Morgan Stanley and raised tgt to $870 from $748 as expects KLA to outgrow WFE in 2025-2026 and see a rich catalyst path for a re-rating and says KLA is set up to outgrow WFE on structural and idiosyncratic drivers; MU initiates price increase: Samsung and SK Hynix may follow suit – Digitimes reported.