Stocks Fall on Disappointing Corporate Earnings and Economic Worries

Stocks Fall on Disappointing Corporate Earnings and Economic Worries

  • 21.03.2025 15:29
  • theglobeandmail.com
  • Keywords: Stock Market

Stocks fell due to weaker-than-expected corporate earnings, economic concerns over tariffs, and geopolitical tensions. FedEx, Micron, and Nike led declines amid profit warnings and tariff impacts. Global markets dropped as fears of slower growth and higher trade barriers weighed heavily.

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Context

Business Insights and Market Implications Analysis

Key Market Performance

  • S&P 500 Index: Down -0.54%
  • Dow Jones Industrials Index: Down -0.62%
  • Nasdaq 100 Index: Down -0.53%

Corporate Earnings and Economic Concerns

  • FedEx: Down more than -9% due to cost pressures and weaker demand, cutting its full-year EPS forecast to $18.00-$18.60 from $19.00-$20.00.
  • Nike: Down over -6%, citing tariffs and geopolitical issues for reduced digital traffic and elevated inventory.
  • Micron Technology: Down more than -7% after forecasting Q3 gross margin below consensus.

Geopolitical Risks

  • Middle East Tensions: Escalation in Israel-Gaza conflict and US strikes on Yemen's Houthi rebels increased market volatility.
  • Trade Tariffs: Concerns over US tariffs impacting global economic growth, with Trump's April 2 deadline for reciprocal tariffs.

Interest Rates and Bond Markets

  • 10-year T-note yield: Down -0.8 bp to 4.227%, driven by safe-haven demand.
  • European Bonds: Mixed performance; German bunds down -2.2 bp, UK gilts up +4.7 bp.

Market Volatility and Events

  • Triple-Witching Event: Caused higher volume and potential price movements due to $4.5 trillion in expiring contracts.
  • Consumer Confidence: Eurozone March index fell -0.9 to -14.5, below expectations.

Sector Performance

  • Technology: Chip stocks down significantly (Micron, AMD, Qualcomm).
  • Travel and Hospitality: Stocks down due to economic concerns (Marriott, Carnival).
  • Homebuilding: Lennar Corp down -5% on weak Q1 margins and forecasted new orders.

Defensive Sectors Outperforming

  • Food and Beverage: Hershey, Campbell's, and General Mills up +1%.
  • Healthcare: Alnylam Pharmaceuticals up +9% after drug approval expansion.

Industrial and Aerospace

  • Boeing: Up more than +1% on Malaysian plane orders.
  • Lockheed Martin: Up +1% ahead of fighter jet contest announcement.

Federal Reserve Policy

  • Fed Officials: Williams and Goolsbee support steady policy, limiting rate cut expectations at 21%.
  • ECB Rate Cuts: Swaps indicate 59% chance of a -25 bp cut in April.

Long-Term Implications

  • Tariffs and geopolitical risks may weaken corporate earnings and global growth.
  • Market volatility expected to persist due to economic uncertainties and regulatory changes.