From the T&Q Desk
As the week draws to a close, investors are catching their breath after an active stretch of trading dominated by central bank messaging, geopolitical developments, and cautionary corporate guidance. The S&P 500 is on track to finish the week down about 1.4%, while the Dow Jones Industrial Average is off roughly 0.8% and the Nasdaq Composite has slid more than 2%, led lower by renewed selling in large-cap tech.
The week's defining moment came from the Federal Reserve, which held rates steady but maintained its forecast for two cuts later this year—even as it raised its inflation outlook to 2.7% and downgraded GDP growth to 1.7%. Fed Chair Powell sought to calm markets, calling the inflationary effects of tariffs "transitory," but investors largely sold the news, driving a post-FOMC reversal across equities and bond yields.
FedEx and Nike both reported earnings this week, with FedEx slashing its full-year outlook on signs of an industrial slowdown and Nike beating expectations but warning of tougher quarters ahead. On the economic front, we saw a surge in February existing-home sales (+4.2%), a dip in jobless claims to 223,000, and a soft reading in the Leading Economic Index, all of which painted a picture of gradually slowing, but still resilient, economic growth.
Geopolitics loomed large, with President Trump’s team pushing forward with tariff expansions, a plan to shutter the Department of Education, and a newly announced wartime initiative to boost domestic mineral production. Abroad, tensions escalated as Israel resumed its military campaign in Gaza. In Europe, President Trump and Vladimir Putin continued technical talks over a partial ceasefire in Ukraine, focused on securing energy infrastructure and opening Black Sea shipping lanes. While some progress has been made, a comprehensive agreement remains elusive, keeping regional risk elevated.
With triple witching options expirations hitting today and the first quarter nearing its end, markets are bracing for elevated volatility into the close. We’ll be watching how equity flows and positioning adjust—and what that might signal for Q2.
Featured Headlines
Trump to Invoke Wartime Powers to Boost Critical Mineral Production
President Trump plans to utilize the Defense Production Act to expand domestic production of critical minerals essential for manufacturing semiconductors, batteries, and other high-tech equipment. This move aims to reduce reliance on foreign sources and strengthen national security by ensuring a stable supply chain for these vital materials.
Elon Musk to Receive Top-Secret Briefing on U.S. War Plans for China
Elon Musk, CEO of Tesla and SpaceX, is scheduled to receive a top-secret briefing from the Pentagon concerning U.S. military strategies related to China. This unprecedented move underscores Musk's significant role in sectors critical to national security, including space exploration and satellite communications.
Frackers Express Concerns Over Trump's Initial Policies
U.S. shale oil producers, initially optimistic about President Trump's tenure, are now apprehensive due to policy shifts that may affect the energy sector. Uncertainties surrounding environmental regulations and trade policies have led to increased caution among fracking companies.
FedEx Lowers Profit Outlook Amid Economic Uncertainty
FedEx has reduced its profit expectations for fiscal 2025, citing ongoing challenges in the U.S. industrial economy, including inflation and uncertain global trade policies. Despite reporting higher profit and sales in the fiscal third quarter, the company anticipates flat to declining sales for the full fiscal year.
Analyst Skepticism Towards $25 Billion AI Company
A prominent blogger, known for accurately predicting Nvidia's performance, has expressed doubts about the valuation of a $25 billion AI firm. The skepticism highlights ongoing debates regarding valuations within the rapidly evolving artificial intelligence sector.
Investors Brace for Triple-Witching Options Expiration
Investors are preparing for Friday's 'triple witching,' a quarterly event where stock options, index options, and index futures expire simultaneously. This occurrence, involving approximately $4.7 trillion in notional value, often leads to increased volatility and trading volume.
Nike Reports Earnings Beat but Warns of Future Challenges
Nike reported fiscal third-quarter earnings of 54 cents per share, surpassing analysts' expectations of 30 cents. Revenue reached $11.3 billion, despite being 9% lower year-over-year. However, the company cautioned about potential revenue and profitability challenges ahead due to ongoing overhaul efforts.
'Big Short' Investor Warns of DOGE's Market Impact
A notable investor from 'The Big Short' has raised concerns that the market is underestimating the negative impact of aggressive federal spending cuts. These cuts, driven by the White House DOGE office with Elon Musk as its public face, include the termination of at least 25,000 federal workers across 18 agencies. Moses highlights that these measures, coupled with Trump's inconsistent tariff policies, are generating economic uncertainty and potential recession fears.
Previous Trading Day Recap
Markets Edge Lower Amid Mixed Economic Signals
On Thursday, U.S. equity markets experienced slight declines as investors weighed solid economic data against ongoing policy uncertainties. The S&P 500 decreased by 0.2%, the Dow Jones Industrial Average dipped less than 0.1%, and the Nasdaq Composite fell 0.3%.
Key Market Drivers
Stable Jobless Claims: Initial unemployment claims rose marginally by 2,000 to 223,000 for the week ending March 15, slightly below analysts' expectations of 224,000. This uptick suggests that layoffs remain historically low, indicating a healthy labor market.
Robust Existing-Home Sales: The housing market showed resilience with existing-home sales increasing by 4.2% in February, surpassing forecasts. This rise reflects sustained consumer confidence and demand in the real estate sector.
Federal Reserve's Cautious Outlook: While the Federal Reserve maintained interest rates, Chair Jerome Powell emphasized the prevailing economic uncertainties, particularly concerning trade policies and government spending cuts. This cautious stance contributed to market volatility.
Treasuries & Commodities
Oil Prices Rise: Crude oil prices increased, driven by geopolitical tensions in the Middle East and supply concerns.
Treasury Yields Steady: The yield on the 10-year Treasury note held steady, reflecting investor caution amid mixed economic indicators.
Economic Calendar for March 21, 2025
No notable releases
Earnings Calendar – March 21, 2025
Pre-Market Reports
Carnival Cruise Line (CCL) - The cruise line operator is scheduled to report its first-quarter earnings before the market opens. Analysts forecast earnings per share of $0.02 on revenue of $5.75 billion. Investors will closely monitor booking trends and forward guidance as indicators of consumer confidence in the travel sector.
Overnight Markets
Asia (March 21):
Nikkei 225: +0.3%, buoyed by gains in technology and export-oriented stocks.
Shanghai Composite: -0.2%, weighed down by concerns over regulatory tightening in the property sector.
Europe (as of 6:00 AM ET):
FTSE 100: -0.1%, with losses in mining stocks offsetting gains in consumer staples.
DAX: +0.2%, supported by positive manufacturing data and a weaker euro.
US Pre-Market (As of 6:30 AM ET, March 20, 2025)
Final Thoughts
Investors are navigating a complex landscape marked by geopolitical developments, corporate earnings reports, and significant options expirations. The upcoming "triple witching" event may introduce additional volatility. Maintaining a diversified portfolio and staying informed are essential strategies in this environment.