A Clawback to Flat
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Stocks began the week with a sprightly little recovery, bouncing off the opening lows as if stumbling through five of the last six weeks had been a clerical error. The rally was so inexplicable that it might as well have been sponsored by the Tooth Fairy.
Level Change 3/31/25 (%)
– – – – – – – – – – – – – – –
+1.0 Dow
-0.1 Nasdaq
-0.0 Nasdaq 100
+0.6 S&P 500
+0.1 S&P 400
+0.4 S&P 600
It didn’t start well, but rather in the dumps on weekend tariff and geopolitical threats from America’s Don. He may not control the Five Families, but has a tight grip on the five-day moving average.
WTI crude oil surged 3.1% to a five-week high on geopolitical pressure. Yesterday, President Trump threatened to impose more tariffs on Russia if he feels the country is hampering efforts to end its invasion of Ukraine, and to possibly tariff and bomb Iran if it won’t reach an agreement over its nuclear program. The US Energy Information Agency reports that Russia and Iran produce about 15% of global oil output.
Tech stocks came under pressure after The Information added a spicy new chapter to the “AI Capex Bubble” saga Rise of the Machines, Fall of the Margins. Palo Alto Networks (PANW -1.2%) slashed AI spending 95% by switching to DeepSeek from OpenAI. That kind of cost-cutting could force Microsoft, Salesforce, and other software firms to drop prices. Microsoft (MSFT -0.9%) counters that cheaper AI will mean more AI, and more AI means more customers and eventually higher revenue.
Economic data were mixed.
The Chicago PMI rose for the third month in a row, hitting a high not seen since November — good for purchasing managers, whoever they are. Meanwhile, the Dallas Fed reported that Texans are not enjoying the show: its business activity index slid to its worst reading since last July, while the outlook uncertainty index rose to a level not seen since fall 2022, when the Nasdaq circled the drain and OpenAI was still a curiosity working on some kind of chat thingy.
In Fedspeak:
Richmond Fed President Tom Barkin said consumers are exhausted and frustrated with high prices but he’s in no hurry to cut rates, due to uncertainty around tariffs. He worries they’ll further increase prices and kneecap the job market. “Call me nervous on both,” he said on CNBC, the way a pilot might mention on the intercom that today’s clouds look a little weird. He added that “there’s a lot of uncertainty right now, and I think that makes the case for wait [on rate cuts] and see how this plays out.”
New York Fed President John Williams also weighed in — and surprise! — he agrees that tariffs will could push prices up, though still forecasts stable inflation. The house is on fire, but the thermostat’s holding steady. He told Yahoo Finance that monetary policy is “well-positioned” for whatever might unfold this year, including the risk of an inflation heat-up. He wants to maintain current interest rates “for some time” while awaiting data.
In life’s grand mystery, aren’t we all just awaiting data?
— Jason Kelly
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