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Asleep on The Street
In a session that could best be described as Wall Street on Ambien, US equities mostly climbed a little higher today, likely on muscle memory after yesterday’s strong showing pushed the S&P 500 above its 200-day moving average.
Level Change 3/25/25 (%)
– – – – – – – – – – – – – – –
+0.0 Dow
+0.5 Nasdaq
+0.5 Nasdaq 100
+0.2 S&P 500
-0.3 S&P 400
-0.6 S&P 600
Market participants — those still awake — locked into a state of meditative inaction, awaiting enlightenment from the April 2 tariff deadline. A Financial Times report whispered that the White House is contemplating a two-step strategy: 1) slap on more tariffs using emergency powers and 2) open another round of investigations into trading partners.
Economic data underwhelmed.
Consumer confidence from the Conference Board dropped for a fourth consecutive month, reaching its lowest level since January 2021. Purchase plans for large-ticket items declined, and confidence in future income all but evaporated. Important to keep in mind this is soft data, exerting little impact unless and until it manifests in hard data, which often it does not. Kelly Letter subscribers, see “Soft Data Versus Hard” in last Sunday’s issue.
The Richmond Fed’s manufacturing index pulled a vanishing act: -4 from +6 in February, missing +5.0 consensus by a huge margin. Prices paid increased to 3.75% from 2.23% in February.
Federal Reserve governor Adriana Kugler said recent goods inflation is unhelpful and impacts expectations, noting recent economic data weakness, particularly retail sales and the pace of hiring in January and February. She favors holding interest rates steady for “some time” due to a “heightened level of uncertainty.”
Tesla (TSLA +3.5%) European Union sales fell sharply for the second straight month in February. Sales fell 58% in the first two months of the year. Chinese EV brands are surging into the vacuum. More than 94% of respondents to a recent survey of 100,000 Germans said they would no longer buy a Tesla.
Alibaba (BABA -1.3%) chairman Joe “Buzzkill” Tsai warned of a bubble in AI data center buildout, with plans looking a few teraflops ahead of reality. At HSBC’s Global Investment Summit in Hong Kong, he said: “People are talking about $500B, several hundred billion dollars. … I think in a way, people are investing ahead of the demand that they’re seeing today.” He detects “the beginning of some kind of bubble.”
KB Home (KBH -5.2%) sauntered in with all the cheer of a rainstorm at an open house. It missed on fiscal Q1 results and guided down for FY25, noting consumers balking at high mortgage rates on macro and geopolitical uncertainties. CEO Jeffrey Mezger said the start of this year’s key spring selling season has been “more muted” than usual, with higher interest in free cookies than signed contracts. This echoes last week’s downbeat commentary by fellow homebuilder Lennar.
— Jason Kelly
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