US Stocks End Another Volatile Week, Cyclical Stocks and Big Tech Hit Hardest

March 15, 2025 TruthUSA

Both the S&P 500 and Nasdaq officially fell into correction territory amid tariff and recession fears.

U.S. stocks experienced another volatile week. Despite strong bounce-backs on March 14, all major averages recorded sharp weekly losses, led by cyclical stocks and Big Tech amid tariff and recession fears ahead of the March Fed meeting.

The S&P 500 ended March 14 at 5,638, down 2.27 percent for the week; the Dow Jones Industrial Average closed at 41,488, down 3.07 percent; the Nasdaq finished the week at 17,754, down 2.43 percent; and the small-cap Russell 2000 was down 1.51 percent to end at 2,044.

The cyclical sector, which includes companies that sell goods and services susceptible to economic expansions and contractions, was hit hard early in the week by recession fears. For instance, the stocks of travel and leisure companies, such as airlines and cruise lines, suffered hefty losses following a warning from Delta Airlines about a slowdown in consumer spending on travel. Delta’s stock was down 12.26 percent for the week, while American Airlines lost 16.58 percent.

Meanwhile, the Consumer Discretionary Select SPDR exchange-traded fund, which invests in luxury, retail, restaurant, and entertainment stocks, fell 4.36 percent for the week and is down 12.32 percent year to date.

Selling in the cyclical sector spread to other industries, affecting shares of Magnificent Seven—Apple, Amazon, Tesla, Nvidia, Alphabet, Meta Platforms, and Microsoft—on valuation concerns. The group sold off between 2 percent and 15 percent on March 10 alone, weighing on the Nasdaq, which lost 4 percent that day as concerns about recession and tariffs dominated Wall Street.

“While investors are worried about tariffs and the uncertainty and inflation risks that they pose, what we are seeing in markets over the past few weeks is a textbook correction,” John Creekmur, chief investment officer of Creekmur Wealth Advisors, told The Epoch Times following the sell-off on March 10.

“It was only a few weeks ago in February that the S&P 500 hit a record high, and elevated valuations, coupled with negative headline risk, are key ingredients of a correction.”

The correction continued over the next few days, with the sell-off broadening and pushing equity indexes into correction territory. Concerns over an impending government shutdown and lackluster earnings guidance from Oracle and Adobe added to the negative market sentiment.

Market sentiment was so negative that traders and investors shook off a couple of positive reports on the inflation front in the middle of the week. One was the Consumer Price Index report, which measures retail inflation nationwide. It showed that annual inflation eased to 2.8 percent in February from 3 percent in January, below forecasts of 2.9 percent, led by lower energy costs.

The other is the Producer Price Index report, which measures wholesale inflation. It eased to 3.2 percent in February, the smallest rate in three months from an upwardly revised 3.7 percent in January and forecasts of 3.3 percent.

On March 13, the S&P 500 dipped into correction territory, dropping 10 percent from its recent high.

However, Senate Minority Leader Chuck Schumer (D-N.Y.) announced from the Senate floor on the evening of March 13 that he would not block a government funding bill. The stock markets rebounded sharply on March 14.

The March University of Michigan consumer sentiment index plunged to 57.9 from 64.7 in February. It’s the lowest since November 2022 and well below forecasts of 63.1, indicating weaker spending and a weaker economy ahead.

Meanwhile, the March Michigan 5-Year inflation expectations increased to 3.90 percent, up from 3.50 percent in February, pointing to higher inflation ahead.

These reports complicate the task of the Federal Open Market Operations Committee, the policy arm of the Federal Reserve, which convenes next week to set the nation’s monetary policy for the next five weeks.

According to CME’s FedWatch tool, the nation’s central bank will likely leave the federal funds rate unchanged at the current range of 4.25–4.5 percent. The tool provides the probability of changes in this critical monetary policy instrument.

As of March. 15, the tool points to a 98 percent probability of the fed funds rate remaining at its present range.

“The Federal Reserve is likely to message at the March meeting that it’s looking for a longer string of favorable inflation data—or weakening labor market data—before resuming its rate cutting campaign,” Yung-Yu Ma, chief investment officer at BMO Wealth Management, told The Epoch Times.

However, surprises in the Fed’s guidance could always take the market on another rough ride into correction territory.

Still, market corrections present opportunities for long-term investors as equity valuations become more reasonable for companies with strong fundamentals.

Creekmur sees some opportunities in the tech sector.

“From a valuation standpoint, the technology sector is looking attractive, especially since it began 2025 with a somewhat lackluster performance even before this recent market correction,” he said.

“During a market correction, it’s important to focus on sectors that had strong fundamentals even before the correction, including technology, which is an area of the market still generating robust earnings.”

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