U.S. stocks rallied on the afternoon of March 7, reversing early losses to close higher for the day and ending another volatile week marked by multiple headlines on tariffs, the global economy, and corporate earnings. All major equity averages recorded sharp weekly declines, making it the worst week of the year so far, led by small caps and tech shares.
The S&P 500 ended March 7 at 5,770, down 3.10 percent for the week; the Dow Jones Industrial Average closed at 42,801, down 2.37 percent; the Nasdaq finished the week at 18,196, down 3.5 percent; and the small-cap Russell 2000 was down 4.05 percent to end at 2,075.After the previous week’s mixed closing, trading for the new week began with a broad sell-off as headlines on tariffs and countertariffs crossed the Wall Street tape. Once again, the sell-off was led by the small-cap and tech stocks, with the tech-heavy Nasdaq and the small-cap Russell indexes each losing more than 2.5 percent in the trading session on March 3.
Among tech stocks, semiconductor shares were hit the hardest, with Nvidia and Broadcom losing nearly 9 percent and 6 percent, respectively, and ending near their September 2024 lows.
The sell-off intensified on the morning of March 4, but eased in the afternoon, helped by steady bond yields and new headlines clarifying tariffs on Canada and Mexico.
Market volatility continued for the rest of the week, led by more market-moving headlines, including the news of a spike in European bond yields to multi-year highs that put pressure on the dollar against the euro, raising fears of capital flight from the United States to Europe.
Earnings reports from leading retailers and tech companies were mixed. Target, Best Buy, and Costco reported mixed sales in the retail sector and gave tamed guidance for the rest of the year on the prospects of lower consumer spending. Their shares declined as a result.
Semiconductor giant Broadcom reported solid sales and earnings in the tech sector, but Hewlett Packard Enterprise missed earnings estimates and cut jobs. These reports sent the two stocks in opposite directions, adding to investor confusion over the state of the tech sector.
More headlines suggested that the U.S. economy is slowing down. Key indicators, such as the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index, ISM Manufacturing Employment, ISM Manufacturing New Orders, and construction spending, all came in below market forecasts.
A series of new reports also pointed to a weakening labor market.
Labor market experts are divided on the implications of the most recent reports for the state of the U.S. economy.
“February’s jobs report shows ongoing challenges in the job market,” Sandra Moran, workforce expert and chief customer experience officer at WorkForce Software, told The Epoch Times, referring to the ADP report. She said job reductions at retailers such as Party City, Kohl’s, and Big Lots are leaving employees uncertain.
“These layoffs are only early indicators of businesses across industries, which are all exercising caution when hiring and expanding their workforces,” she said.
ZipRecruiter chief economist Julia Pollak struck a less pessimistic tone about the state of the U.S. labor market.
“The February [nonfarm] jobs report was a bit of a snoozer—solid, but not much drama,” she told The Epoch Times. “Employers added 151,000 jobs last month, a decent if unspectacular gain.
“The unemployment rate ticked back up to 4.1 percent, a bit above its recent lows but still low by historical standards. Revisions to the prior two months were minimal, leaving the overall picture unchanged.”
She said she believes that the labor market is softening, not retrenching.
“The share of prime-age workers in the labor force held steady at 83.5 percent, just below its cyclical peak last year,” she said.
“Wage growth remains strong at 4.0 percent year over year, suggesting that worker demand hasn’t collapsed. The Fed will likely welcome signs of a cooling job market, but policymakers will also watch for signs that the softening is becoming more serious.”
Meanwhile, investment experts see market volatility continuing until the political and economic headlines bring more clarity.
“While the rallies have been short-lived in recent trading, investors are wondering if stocks can string together a few positive sessions as a relief rally,” Bret Kenwell, U.S. investment analyst for eToro, told The Epoch Times. “But until there’s more clarity around the current trade war and reassurance around the economy, a ‘risk-off’ mood can linger on Wall Street.”
Glen Smith, chief investment officer at GDS Wealth Management, said he believes that the stock market is moving in tandem with tariff headlines, and that that is likely to keep volatility significantly elevated, as markets do not like uncertainty.
“While we expect the market to find its footing and recover from the tariff-driven sell-off, investors should brace for continued choppiness until these uncertainties clear,” he told The Epoch Times.
Smith said he sees the recent market sell-off creating compelling valuations in specific sectors, such as financials and technology.
“For investors who still have cash on the sidelines, we see opportunities in these sectors, especially since valuations have contracted over the past few weeks,” he said.
