S&P 500 slips into Correction: What’s Next? 14/03/2025

HOT stories for today

 

US market wrap:
 

• Wall Street wrapped up Thursday in negative territory, with stocks tumbling across the board. The S&P 500 slid 1.39%, now sitting 10.1% below its all-time high—officially entering correction territory. The Dow Jones Industrial Average shed 1.3%, marking its fourth consecutive losing session, while the Nasdaq Composite plunged 1.96%.
• Despite the U.S. producer price index remaining unchanged in February—falling short of the anticipated 0.3% increase—fresh tariff concerns sent shockwaves through the market, heightening anxiety and uncertainty. Tech stocks bore the brunt of the sell-off, while a handful of defensive sectors managed to attract cautious investors. Traders are bracing for the next major market mover, as the current trend continues to lean bearish. In an otherwise bleak week, utilities stood out as the lone bright spot, emerging as the only sector to finish in positive territory.

S&P 500 slips into Correction: What’s Next?
 

• The S&P 500 officially entered correction territory Thursday, tumbling 1.4% to 5,521.52—marking a rapid 10% drop from its February 19 peak of 6,144.15 and the fastest correction since the COVID-19 crash in March 2020. History suggests short-term losses but potential long-term gains. Since 2008, the index has typically fallen 1.7% in the first month after a correction but rebounded with average gains of 2.1% over three months, nearly 5% in six months, and 15.3% a year later, according to Dow Jones Market Data.
• The latest selloff stems from escalating trade tensions, as Trump’s renewed tariff threats— including a proposed 200% tax on EU alcohol—rattled markets, while Canada scrambles to de-escalate a tariff standoff with the U.S. Investors now face a key question: will history repeat, or is this just the beginning?

 
Stocks on the move: 
      

• Ulta Beauty (ULTA) — Shares surged 7% after the beauty retailer outperformed expectations for Q4, reporting earnings of $8.46 per share on $3.49 billion in revenue, surpassing analysts' estimates of $7.12 per share and $3.46 billion in revenue. However, full-year guidance remained weak.
• Docusign (DOCU) — The electronic signature platform climbed 8% following stronger-than-expected Q4 earnings, posting adjusted earnings of 86 cents per share, exceeding consensus forecasts.
• Rubrik (RBRK) — The data management stock soared 15% after delivering a better-than-expected Q4 report, with an adjusted loss of 18 cents per share—significantly narrower than analysts' projected 39-cent loss, per LSEG.
• Semtech (SMTC) — Shares of the semiconductor firm spiked nearly 12% on upbeat Q4 results and strong guidance. Semtech reported earnings of 40 cents per share, excluding certain items, on $251 million in revenue, topping analyst expectations of 32 cents per share and $249 million in revenue, according to LSEG.

Today’s action

• Asian stocks mostly climbed on Friday, shrugging off steep losses in U.S. markets from the previous session as concerns over Trump’s tariff plans rattled investors. Mainland China’s CSI 300 led the region, surging 2.34% by 1:24 p.m. Singapore time, driven by gains in healthcare, consumer cyclicals, and non-cyclicals. Hong Kong’s Hang Seng Index also rallied 1.9%, with WuXi Biologics (2269.HK) soaring 14.38% as the top gainer.
• Meanwhile, U.S. stock futures rebounded after the S&P 500’s slide into correction territory. Futures linked to the broad index climbed 0.81%, Nasdaq 100 futures advanced 1.05%, and Dow Jones Industrial Average futures rose 231 points, or 0.57%. Investors are eyeing key consumer sentiment data set for release Friday, capping a busy week of economic reports, including inflation readings. Markets are also bracing for next week’s Federal Reserve policy meeting, where traders assign a 98% probability that interest rates will remain unchanged, per CME’s FedWatch tool.

Watchlist: ULTA, DOCU, SMTC, RBRK, TSLA, AAPL, NVDA,LI

Bitcoin
 

• Bitcoin (BTC) dipped 2% on March 13, erasing earlier gains as traders reacted to falling U.S. inflation data, which paradoxically stoked fears of escalating trade tensions. The cryptocurrency hovered around $81,937, caught between key buy and sell liquidity zones on exchange order books.
• Despite Bitcoin’s bullish trend, its price struggled against the 200-day simple moving average (SMA), acting as resistance for the fourth straight day. Keith Alan, co-founder of Material Indicators, noted that this level typically serves as support in bull markets but remains a critical hurdle to reclaim. “Bitcoin faces strong resistance at the 200-Day MA for the 4th consecutive day,” Alan commented on X, suggesting that unless a major catalyst—such as an unexpected government announcement—emerges, a breakout is unlikely in the short term.
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176

Forex

• EUR/USD slipped to 1.0835 in Friday’s Asian session as escalating U.S.-EU trade tensions weighed on the euro. Trump’s threat of a 200% tariff on European alcohol pressured sentiment, while traders raised bets on a Fed rate cut in June. Markets await Germany’s HICP inflation data and the Michigan Consumer Sentiment Index later today.
• Meanwhile, USD/JPY rose past the mid-148.00s as improved global risk sentiment weakened the yen. Optimism from White House and Canadian officials, along with hopes of avoiding a U.S. government shutdown, lifted equities and dented demand for safe havens. However, hawkish BoJ expectations and trade uncertainty may limit yen losses, while Fed rate cut bets could cap further dollar gains.
  Watchlist: EUR/USD: 1.0700-1.0900, USD/JPY: 148-160

Basic Materials

• Gold (XAU/USD) remains well-supported as uncertainty surrounding Trump’s aggressive trade policies fuels safe-haven demand. Expectations of Federal Reserve rate cuts further boost the metal, though a modest U.S. dollar uptick limits gains. However, improved global risk sentiment—driven by positive White House remarks, Canadian officials’ optimism, and expectations of avoiding a U.S. government shutdown—has bolstered equities, tempering gold’s upside momentum.
• Meanwhile, crude oil prices edged higher on Friday after fresh U.S. sanctions targeted Iranian oil and Hong Kong-flagged vessels linked to Iran’s shadow fleet. Despite the rebound, West Texas Intermediate (WTI) remains on course for its eighth consecutive weekly loss, hovering around $66.70 per barrel during Asian trading. Lingering global trade tensions, exacerbated by Trump’s threat of a 200% tariff on European wines and champagne, continue to weigh on oil demand.
  Watchlist: GOLD 2600-3000, US Oil: 65.00-79.00

Key Economic Events Today:

EST time
10:00 am: USD Consumer Sentiment 
10:00 am: USD Infaltion Expectations

Earnings

BMO (Before the US Market opens)
LI              Li Auto
WRD        WeRide Inc.
RLX         RLX Technology
BKE         Buckle Inc.
AMC (After the US Market closes): Enjoy your weekend!

The TEFS Analyst team wishes you a successful day!