March 6, 2025

After a relief rally the day before, the market got blasted downward once again, and going into today’s always important monthly jobs report, this week has become the worst one of the year for equities so far.

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The market has become rattled to the downside by the whiplash created by the President’s tariffs and uncertainty about the future course of the economy.

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The Dow dropped by 427 to 42,579, up about 200 points from its worst intraday level due to further buying in consumer staples issues like HON, MCD, MRK, V in addition to T, CVX and XOM even as crude oil prices have collapsed, as the technology stocks sold off heavily once again. It has been the worst week for this item since two years ago.

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The S&P resumed its slide and collapsed by 104 down to 5738 for its worst week since last September led by technology and financials once again.

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The Nasdaq has now undergone a “correction” after having dropped by worse than 10% from its high in December as many of the former technology stocks have collapsed in excess of this amount after having been the non-stop upside leaders last year until early this year as well.

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The Russell 2000 Index of small stocks also continued its collapse and ended 34 points down to 2066 while the VIX marching higher to 24.87 as the S&P has now been down or up  by more than 1% for the past six days.

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The market collapsed even though the President offer a one-month reprieve from  his 25% tariffs on many goods imported from Mexico and Canada. This is unlike the bounce stocks got the prior day from his giving a one-month exemption specifically for automakers.

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There are those who keep hope alive that Trump may be using tariffs as just a tool for negotiations rather than as a permanent policy and that he may ultimately avoid a worst-case trade war that grinds down economies and sends inflation higher.

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But he is still pressing ahead with other tariffs scheduled to take effect on April 2nd.  And the growing pile of dizzying back and forth moves on tariffs is only amping up the uncertainty. It was just on Monday that he said there was “no room” left for negotiations to avert the tariffs on Mexico and Canada that took effect Tuesday.

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U.S. businesses are already saying they are confronting “chaos” because of all the uncertainty coming out of Washington. while U.S. households are bracing for higher inflation because of the tariffs, which is sapping their confidence.

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“Much will depend on whether these new tariffs prove temporary or are toned down,” according to one strategist. “But even if they are ultimately removed, we anticipate lasting damage to global economic activity.”

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When asked whether his delays on tariffs reflected the slump for the stock market, Trump said “I’m not even looking at the market.” He earlier in the Oval Office blamed the falling prices on “globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us many years ago.”

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Some big retailers have been offering warning signals recently about how much U.S. consumers can keep spending.

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M reported slightly weaker revenue for the end of 2024 than analysts expected, though its profit topped expectations. It also gave a forecast for profit in 2025 that fell short of expectations.

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It was a similar story for VSCO, which beat fourth-quarter sales and profit forecasts but gave a revenue forecast for the upcoming year that fell short of analysts’ expectations. Its stock fell by 8%.

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Semiconductor companies and their suppliers were particularly bad after soaring to staggering heights because of the frenzy around AI technology.

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MRVL lost nearly a fifth of its value and dropped 20% even though it reported results for the latest quarter that edged past analysts’ forecasts. It also said it expects revenue growth in the current quarter of more than 60% from the prior year, give or take a bit. But that wasn’t enough for investors, who have grown used to AI-related companies trouncing expectations.

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AI superstars had been dominating for years and helped it run to record after record. But those soaring performances, including a nearly 820% surge for NVDA from 2023 into 2024, had critics saying prices had grown too expensive. They are also facing threats as Chinese companies develop their own AI offerings, with Deep seek famously saying it didn’t need to use the industry’s most expensive chips.

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In stock markets abroad, indexes were mixed in Europe after the E.C.B. cut interest rates, as was widely expected.

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German stocks rallied 1.5% as the market continues to feel reverberations from an agreement by the two parties that will form the country’s next government to loosen constitutional limits on borrowing. This is a major turnaround in German budget policy and opens the way for new borrowing and spending over the next decade.

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Stocks also rose in Asia, including jumps of 3.3% in Hong Kong and 1.2% in Shanghai.

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China’s commerce minister said Thursday that his country will not yield to bullying and that its economy can weather higher tariffs imposed by Trump, though he added that there are “no winners in a trade war.”

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In the bond market, the 10-year Treasury yield edged up to 4.29% from 4.28% late Wednesday.

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Earnings this week will see: yesterday -  MBO, MRVL, M, VSCO lower and ZS, BJ, JWN higher; today plus tonight – BURL and GAP higher while COST, LUNR, IOT are lower.  

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Economic reports are: yesterday - January trade balance hit a record low of $131 billion, weekly jobless claims fell to 221K and unit labor costs eased a bit to 2.2%; today – February jobs report came in at 151,000 and the unemployment rate went to 4.1%. Average hourly earnings rose by 0.3% and 0.4% year over year. The average work week fell to 34.1 hours and the labor force participation rate went to 62.4. 4%.