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“Float like a butterfly, sting like a bee.” — Muhammad Ali
Chart of the Day
Good morning!
Well, that didn’t last long.
Just when some investors started seeing the light at the end of this quarter-long tunnel of market declines, the game seems to have changed again.
The S&P 500 is still on course to extend its 0.5% gain from last week, but it fell 1.1% Wednesday, posting its worst day in two weeks. Tech darlings were flickering back to life. The Magnificent Seven rose 6.2% in the previous three sessions, their strongest performance since November, according to a Wall Street Journal story citing Deutsche Bank. Even Treasury yields had declined last week, but have since jumped higher.
The broad-based index is off 7% from its all-time highs.
Here’s what’s interesting to me though: Declines of this magnitude aren’t all that bad. So why does it feel so bad? So bad that the consumer confidence index fell this month to its lowest level since January 2021.
There’s at least a couple reasons why:
First, U.S. households are more invested in the stock market than ever before. In fact, individual investors have become the most important holder of U.S. equities, owning 60% of the universe, according to a recent CNBC article citing JPMorgan data.
That’s not all. One also has to consider that the exuberant stock market rally of the past few years has minted a record number of millionaires, meaning that when you get used to seeing your investment holdings grow to a certain number for such a long duration, it’s hard to stay rational when the inevitable declines come. As a reminder, the S&P 500 rose over 20% annually in the past two years.
Second, the venerable saying that “markets don’t like uncertainty” has taken over investors’ psyche.
Investors can handle bad news. They digest it, discount it, and get past it. But how can you move on when you don’t even know what is going on? Even skilled corporate executives are under distress during this so-called “golden age of America.” Perhaps that’s why stock declines accelerated Wednesday afternoon after President Donald Trump announced new auto tariffs.
It’s still too early to know how long the pain might continue. But one thing is for sure – whether you choose to batten down the hatches or adopt a more proactive response, the bad times won’t last forever. They never have.
Share your thoughts
Has the stock market decline hurt you, or are you impartial?
Here’s what a reader commented
3.9 million high school graduates. That is approximately 1% of the population that potentially can enter the workforce. Likely a similar amount is exiting the workforce, as the boomer generation retires (and was a “pig in the python”, just as today’s class is). So, there will be jobs. But, your article rightly asks if white-collar jobs are the place to be.
I believe that many more young people should seek out the “trades”. These are generally good-paying jobs, and good carpenters, plumbers, electricians, etc. are seemingly always in demand. Unlikely that those jobs will be AI anytime soon (if ever). Why spend $100k or more on college when you can get going right away in these professions, potentially even have your own business, etc.? There must be a general shortage of these folks, as the many immigrants seem to gravitate towards these jobs. Granted, not glorious, and clearly hard/sweaty/dirty work, but as your article points out, the path for many college graduates is not necessarily all rosy.
Catch up with FS Insight
Tesla’s recovery exemplifies potential broader market rally, reflecting perceived administrative support aimed at stabilizing markets.
Technical
Near-term equity index trends remain bullish despite Wednesday’s pullback and will likely push higher into the end of the month and quarter.
Crypto
We will dissect the move behind the latest publicly traded company that added bitcoin to its balance sheet, also detail what has boosted the rise in stablecoin market cap, and highlight additional signs of indecision currently weighing on the market.
News We’re Following
Breaking News
- Exclusive: RFK Jr. Plans 10,000 Job Cuts in Major Restructuring of Health Department WSJ
- Trump administration to host podcasters at White House SEM
Markets and economy
- Wall Street Bonuses Powered New York’s Economy in 2024. Some Worry They Peaked. WSJ
- Apollo president says private credit is ‘not a bubble’ FT
- Why copper may be more important to the U.S. economy than oil MW
Business
- CoreWeave’s debut is landmark moment in AI boom and could kick off ‘IPO parade’ CNBC
- Trump says he may reduce China tariffs to help close a TikTok deal CNBC
- Will Lockheed’s F-35 become a casualty of Donald Trump? FT
Politics
- Social Security Administration delays and curtails new anti-fraud policy CNN
- Taxpayers Spent Billions Covering the Same Medicaid Patients Twice WSJ
- Exclusive: U.S. Prosecutors Probe Tip About Timing of Pfizer Vaccine WSJ
Overseas
- US trading partners warn of retaliation to Trump’s 25% car tariffs FT
Of Interest
- The big government spending Maga voters cannot live without FT
- Trump’s Trade War Is Entering a New Phase. Farmers Are on the Front Lines. BR
| Overnight |
| S&P Futures +3
point(s) (+0.1%
) Overnight range: -30 to +13 point(s) |
| APAC |
| Nikkei -0.6%
Topix +0.09% China SHCOMP +0.15% Hang Seng +0.41% Korea -1.39% Singapore +0.45% Australia -0.37% India +0.46% Taiwan -1.39% |
| Europe |
| Stoxx 50 -0.61%
Stoxx 600 -0.65% FTSE 100 -0.69% DAX -0.83% CAC 40 -0.54% Italy -0.41% IBEX -0.4% |
| FX |
| Dollar Index (DXY) -0.01%
to 104.53 EUR/USD +0.12% to 1.0767 GBP/USD +0.25% to 1.292 USD/JPY +0.19% to 150.86 USD/CNY -0.04% to 7.2655 USD/CNH -0.08% to 7.2741 USD/CHF +0.03% to 0.8842 USD/CAD +0.13% to 1.4285 AUD/USD +0.14% to 0.6308 |
| Crypto |
| BTC +0.22%
to 87478.48 ETH +0.9% to 2028.87 XRP -0.37% to 2.3737 Cardano +0.93% to 0.7387 Solana +0.16% to 138.21 Avalanche -0.37% to 21.96 Dogecoin -0.36% to 0.1961 Chainlink +2.55% to 15.62 |
| Commodities and Others |
| VIX +1.36%
to 18.58 WTI Crude -0.22% to 69.5 Brent Crude -0.26% to 73.6 Nat Gas -3.21% to 3.74 RBOB Gas -0.19% to 2.228 Heating Oil -0.31% to 2.281 Gold +0.6% to 3037.42 Silver +0.23% to 33.71 Copper flat at 5.216 |
| US Treasuries |
| 1M -0.1bps
to 4.2886% 3M -1.4bps to 4.2802% 6M -0.6bps to 4.2207% 12M -0.8bps to 4.0885% 2Y +1.2bps to 4.0289% 5Y +2.9bps to 4.1274% 7Y +2.9bps to 4.256% 10Y +3.7bps to 4.3886% 20Y +3.8bps to 4.7643% 30Y +4.0bps to 4.7417% |
| UST Term Structure |
| 2Y-3
M Spread widened 0.8bps to -27.5
bps 10Y-2 Y Spread widened 2.5bps to 35.6 bps 30Y-10 Y Spread widened 0.3bps to 35.1 bps |
| Yesterday's Recap |
| SPX -1.12%
SPX Eq Wt -0.19% NASDAQ 100 -1.83% NASDAQ Comp -2.04% Russell Midcap -0.61% R2k -1.03% R1k Value -0.01% R1k Growth -2.14% R2k Value -0.42% R2k Growth -1.61% FANG+ -2.94% Semis -3.33% Software -2.32% Biotech -2.3% Regional Banks -0.41% SPX GICS1 Sorted: Cons Staples +1.42% Utes +0.7% Energy +0.6% REITs +0.51% Materials +0.18% Fin -0.24% Healthcare -0.37% Indu -0.65% SPX -1.12% Cons Disc -1.67% Comm Srvcs -2.04% Tech -2.46% |
| USD HY OaS |
| All Sectors +8.1bp
to 358bp All Sectors ex-Energy +7.8bp to 323bp Cons Disc +7.1bp to 350bp Indu +8.3bp to 264bp Tech +10.5bp to 366bp Comm Srvcs +7.0bp to 546bp Materials +8.0bp to 325bp Energy +10.9bp to 354bp Fin Snr +7.3bp to 302bp Fin Sub +1.9bp to 227bp Cons Staples +6.8bp to 230bp Healthcare +12.7bp to 375bp Utes +8.6bp to 249bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 3/27 | 8:30AM | 4Q T GDP QoQ | 2.3 | 2.3 |
| 3/28 | 8:30AM | Feb PCE m/m | 0.3 | 0.3 |
| 3/28 | 8:30AM | Feb Core PCE m/m | 0.3 | 0.28 |
| 3/28 | 8:30AM | Feb PCE y/y | 2.5 | 2.5 |
| 3/28 | 8:30AM | Feb Core PCE y/y | 2.7 | 2.64679 |
| 3/28 | 10AM | Mar F UMich 1yr Inf Exp | 4.9 | 4.9 |
| 3/28 | 10AM | Mar F UMich Sentiment | 57.9 | 57.9 |
| 4/1 | 9:45AM | Mar F S&P Manu PMI | n/a | 49.8 |
| 4/1 | 10AM | Mar ISM Manu PMI | 49.8 | 50.3 |
| 4/1 | 10AM | Feb JOLTS | n/a | 7740.0 |
| 4/2 | 10AM | Feb F Durable Gds Orders | n/a | 0.9 |