17 Mar, 2025 23:25 17 Mar, 2025 23:25

US close: Stocks rise again as traders 'buy the dip'

dl wall street wall st new york city nyc new york stock exchange nyse nasdaq trading finance us usa united states of america unsplash — Sharecast / Sophie Backes via Unsplash

US stocks put in decent gains on Monday despite weaker-than-expected economic data, as investors went bargain-hunting following a mass sell-off over the past two weeks.

The Dow gained 1.1% with just one of its 30 constituents closing in the red; the S&P 500 rose 1.0%; while the Nasdaq finished 0.7% higher.

"Monday’s market action had a distinct green tint as stocks defied the ongoing tariff turmoil. The writing was already on the wall—volatility had been steadily retreating, with the VIX tumbling from its recent peaks," said Stephen Innes, managing partner at SPI Asset Management.

"Meanwhile, hedge funds were spotted aggressively buying the dip, capitalising on extreme negative sentiment, which, in hindsight, was a textbook contrarian buy signal."

Markets have rebounded strongly since the S&P 500 entered correction territory on Thursday – the index still remains down around 7% over the month – though analysts at Deutsche Bank reckon the recent sell-off has further to run. Chief strategist Binky Chadha said in a research note at the weekend that "we expect positioning to continue to unwind" as trade tariff uncertainty continues, which could see the S&P 500 hit 5,250 – representing a near-8% drop from Monday's closing price.

Investors largely shrugged off weak economic data on Monday, with US retail sales rising by just 0.2% in February, according to data from the Census Bureau, while January's decline was revised down to 1.2% (from -0.9% initially) – the biggest drop in more than two years. This was well below the 0.7% gain expected by a consensus of analysts.

Meanwhile, the New York Fed's Empire State manufacturing survey slumped 26 points to -20 this month, down from +5.7 in February and the lowest level since January 2024. The consensus forecast was for a small contraction, with a figure closer to -1.9.

Geopolitics and data take centre stage

In the latest back-and-forth newsflow regarding Washington's trade policies, Donald Trump said he would go ahead with reciprocal and additional sector-specific tariffs on April 2 with no exemptions for the steel and aluminium sectors. Speaking to reporters aboard the presidential aircraft Air Force One, Trump said “in certain cases” both types of levies would be placed on imports to the US.

In other news, the OECD cut its growth projections for the world economy for 2025 and 2026 as policy uncertainty hits investment and household consumption. After growing by 3.2% in 2024, global GDP is expected to rise by 3.1% this year and 3.0% next year, the OECD said in its Interim Economic Outlook report, compared with earlier forecasts of 3.3% growth in both years.

Later in the week, markets will be looking out for central bank meetings at the Bank of England, Bank of Japan, the Swiss National Bank and the Federal Reserve. For the Fed specifically, policymakers are expected to maintain interest rates for the second straight meeting, with further rate moves likely to be delayed until the summer amid significant economic volatility.

"With traders increasingly speculating that Trump could be engineering a recession in a bit to drive down boring costs, all eyes will be on Jeremy Powell as he lays out the Fed’s stance in the face of potential economic weakness," said Joshua Mahony, chief market analyst at Scope Markets.

Market movers

Intel's share price surged 7% on reports that its incoming chief executive Lip-Bu Tan has considered significant changes to the company’s chip manufacturing methods and artificial intelligence strategies ahead of his return to the company.

Reuters cited two people familiar with Tan's thinking as saying that the new trajectory includes restructuring the company's approach to AI and staff cuts to address what Tan views as a slow-moving and bloated middle management layer.

Netflix was trading higher after MoffettNathanson raised its rating on the streaming group from 'neutral' to 'buy', while cruise liner Norwegian was bolstered by a JPMorgan upgrade from 'neutral' to 'overweight'.

Shares in PepsiCo rose on the news the soft drinks giant is to spend $1.95bn on fast-growing prebiotic soda brand Poppi, which it says is part of ongoing "portfolio transformation efforts" to adapt to changing consumer needs.

Dow Jones - Risers

Intel Corp. (INTC)$25.696.82%
Nike Inc. (NKE)$73.702.85%
Walmart Inc. (WMT)$87.462.47%
Unitedhealth Group Inc. (UNH)$499.022.12%
3M Co. (MMM)$153.321.86%
International Business Machines Corporation (CDI) (IBM)$252.971.86%
Goldman Sachs Group Inc. (GS)$551.341.83%
Travelers Company Inc. (TRV)$265.211.62%
Dow Chemical Co. (DOW)$37.511.46%
Coca-Cola Co. (KO)$70.121.39%