U.S. Market Outlook for Dow Jones, S&P, and Nasdaq
Futures for major U.S. stock indexes Dow Jones, S&P, and Nasdaq indicate a strong rebound at Friday’s opening, suggesting a recovery from the previous session’s sharp decline.
Investors may see this as an opportunity to buy stocks at a discount after Thursday’s significant sell-off, which pushed both the Nasdaq and S&P 500 to their lowest closing points in six months. The downturn also led the S&P 500 into correction territory, marking a decline of more than 10 percent from February’s record highs.
Optimism in the market may also stem from expectations that the U.S. will sidestep a government shutdown. Senate Minority Leader Chuck Schumer, D-NY, has indicated his willingness to support a Republican spending bill that funds the government through September. While Democrats largely oppose the measure, Schumer emphasized that preventing a government shutdown would be preferable to giving President Donald Trump more leverage in negotiations.
Despite this positive development, some traders may remain hesitant due to persistent concerns about the economic implications of Trump’s trade policies.
Thursday’s Market Performance
Thursday saw a sharp downturn in stocks, completely erasing the gains from Wednesday’s session. The major indexes plunged to six-month lows, with the S&P 500 entering correction territory, down more than 10 percent from February’s peak.
Although the major averages recovered slightly from their worst levels of the day, they still closed firmly in negative territory. The Nasdaq dropped 345.44 points, or 2.0 percent, to close at 17,303.01. The S&P 500 fell 77.78 points, or 1.4 percent, to 5,521.52, while the Dow declined 537.36 points, or 1.3 percent, to 40,813.57.
The sharp decline followed renewed concerns over Trump’s trade policies, particularly after his response to the European Union’s (EU) retaliatory measures. The EU announced tariffs on approximately $28 billion worth of U.S. goods in response to American tariffs on steel and aluminum. In response, Trump stated that the U.S. would impose reciprocal tariffs, declaring, “Whatever they charge us with, we’re charging them.”
Additionally, Trump later warned on Truth Social that he might impose a 200 percent tariff on all EU wines, champagnes, and alcoholic beverages in reaction to what he called a “nasty” 50 percent tariff on whiskey.
Economic Data and Market Reaction
Investors largely ignored a report from the Labor Department showing that producer prices in the U.S. remained flat in February. The Producer Price Index for final demand showed no change after an upwardly revised 0.6 percent increase in January. Analysts had forecast a 0.3 percent increase. Year-over-year, producer price growth slowed to 3.2 percent from January’s revised 3.7 percent.
Another report from the Labor Department showed an unexpected slight decline in initial unemployment claims for the week ending March 8.
Bill Adams, Chief Economist at Comerica Bank, noted that “financial markets are focusing more on White House announcements regarding tariffs and job cuts rather than economic data.”
Sector Performance
The sell-off hit tech stocks hard, with the NYSE Arca Computer Hardware Index dropping 2.9 percent to a nearly four-month low.
Retail stocks also faced significant losses, as the Dow Jones U.S. Retail Index fell 2.6 percent to its lowest closing level in over four months. Software stocks followed a similar trend, with the Dow Jones U.S. Software Index slipping 2.3 percent. Adobe (NASDAQ: ADBE) led the decline in the software sector, tumbling 13.9 percent despite reporting better-than-expected first-quarter earnings, as its second-quarter outlook disappointed investors.
Housing, brokerage, and commercial real estate stocks also saw losses. However, gold stocks bucked the trend, benefiting from a sharp increase in gold prices.