Market Insights

U.S. stocks are swamped in volatility as money streams to Europe and China.

The S&P 500 dropped 3.1 percent last week and the Nasdaq-100 tumbled 3.5 percent. It was the third straight decline for both indexes. Global stocks, on the other hand, rallied as the U.S. dollar fell.

Uncertainty about trade policy hammered sentiment. Investors are worried about tariffs boosting inflation and undermining confidence. They seemed to find more opportunities overseas as Germany looked to borrow and spend on its military. Beijing also hiked stimulus plans, capitalizing on super-low interest rates in China.

“After having outperformed global markets for 15 years, the American stock market is beginning to give up some of that outperformance,” Ruchir Sharma, chairman of Rockefeller International, told CNBC on Thursday. He added that the U.S. wants to cut spending as other countries look to increase outlays. Sharma also noted that China is promoting its private sector to compensate for less American demand.

Economic numbers were mixed. Payroll growth and manufacturing activity were slightly below estimates, but service data was strong and jobless claims showed little strain in the labor market.

Stocks fell after President Trump let tariffs against Mexico and Canada remain in effect. He later delayed some of the duties, but uncertainty weighed on sentiment. Canada and China also retaliated against the U.S. actions, creating the risk of more disruptions.

FactSet reported that the most companies in at least 10 years cited tariffs as a potential risk. (According to conference calls in the recent earnings season.) The research firm also noted that estimates of profit growth in the current quarter have dropped to 7.3 percent from 11.6 percent in late December.

Nasdaq Correction

At its lows on Friday, the Nasdaq-100 slid more than 11 percent below its record high in mid-February. That represents an official “correction” for the growth-heavy benchmark.

Stocks associated with AI led much of the selling. Hewlett Packard Enterprise (HPE) issued earnings and guidance below expectations, giving the server maker its biggest weekly drop ever. Management blamed tariffs and competition in the market for AI hardware. Utilities like Constellation Energy (CEG), known for supplying electricity to data centers, also struggled. Data-storage firms like Western Digital (WDC) and Seagate Technology (STX) slid as well. KKR (KKR) declined after announcing plans to raise capital with a stock sale.

Other technology companies outside the S&P 500 dropped on earnings: Marvell Technology (MRVL), MongoDB (MDB) and Samsara (IOT).

Economically sensitive groups like airlines, cruise-ship operators, banks and financials declined sharply. Best Buy (BBY) and Target (TGT) also fell after warning tariffs would likely hurt business and lift prices.

Health care and consumer staples were the best performers last week and remain the leaders on a year-to-date basis. That price action is consistent with expectations of weaker growth in the U.S.

Foreign stocks and precious metals climbed the most overall last week. Some of the noteworthy movers included steelmaker ArcelorMittal (MT), Gold Fields (GFI) and Trip.com (TCOM).

Last week was also unusual because the S&P 500 and U.S. dollar index both fell more than 3 percent. The only other time that happened was September 1981, according to an analysis by TradingView.

Risk and the Trump ‘Put’?

Stocks face broad uncertainty as the Trump Administration changes trade policies and looks to cut government spending. This has made sentiment the most negative since late 2023, according to the weekly survey by the American Association of Individual Investors.

Some economists see growing risks from the White House’s new direction. Mark Zandi of Moody’s Analytics said tariffs will cost households at least $1,250 per year. John Williams, president of the New York Federal Reserve, and the Fed’s Beige Book survey of economic conditions also said the duties could spur inflation. European strategists at JPMorgan led by Mislav Matejka warned of the economy hitting a potential “air pocket,” with rising uncertainty at the same time high inflation keeps the Fed from cutting rates.

Tom Lee of Fundstrat has argued that the administration will reverse course if stocks fall sharply. However, the president said last week he’s not looking at the stock market and Treasury Secretary Scott Bessent told CNBC there’s no Trump “put” to support equities.

Apple (AAPL) may also face risks after announcing on Friday its advanced AI integration would be delayed from the spring to next year.

S&P 500, daily chart, with select patterns and indicators.

Charting the Market

Some chart watchers may think the S&P 500 has lost its longer-term momentum. The index is facing its second consecutive negative month and a negative quarter. Neither of those things have happened since late 2023.

Movement is also increasing. The S&P 500 fluctuated at least 1 percent for six straight sessions between February 27 and March 6. That was the longest streak with up/down moves of at least 1 percent since November 2020, according to TradeStation data. Next, the index swung 5.6 percent between its high and low last week. That was the biggest range since November 2023. Cboe’s volatility index (VIX) additionally had its highest weekly close since February 2023.

Those points — combined with the economic uncertainty — could suggest a period of heighted volatility has begun.

The S&P 500 fell as low as 5,666 on Friday before rebounding. Chart watchers may view that as a key level because it’s near the peak last July and a low from late September. The index also held its 200-day moving average.

Traders looking for a rebound may eye the 5860 area. That’s near the low of February 27 and highs on March 4 and 5.

Attention may also focus on the 10-year Treasury yield, which rose for the first time in six weeks. It held a December low above 4.1 percent. Further increases could potentially hurt sentiment. That could be especially important with inflation data on Wednesday and Thursday.

The Week Ahead

This week brings economic data and a handful of earnings.

Oracle (ORCL) announces results this afternoon.

Nothing important is scheduled for tomorrow.

The consumer price index (CPI) at 8:30 a.m. ET on Wednesday morning could be the most important event of the week. Crude-oil inventories are due later in the morning and Adobe (ADBE) reports earnings in the postmarket.

Thursday features the producer price index (PPI) and initial jobless claims. Dollar General (DG) results may also reveal noteworthy details on the impact of tariffs.

Consumer sentiment is on Friday morning. While this hasn’t been important historically, it’s recently drawn attention because it reveals opinions about tariffs.

Next week is more active, with the Nvidia GTC AI conference and a Fed meeting.