Stock Market Update Monday March 31, 2025
- AlgoTradeAlert
- 4 days ago
- 4 min read
Updated: 3 days ago
Stock Market Daily Update Monday March 31, 2025 Equities faced significant headwinds as March—and the first quarter—drew to a close, with the S&P 500 (SPX) sinking to a fresh multi-week low. However, a mid-session reversal propelled the index into positive territory by the closing bell. Despite the late-session recovery, March marked the worst monthly performance for equities since 2022.
On the session:
S&P 500 (SPX/SPY): +0.6%
Nasdaq 100 (QQQ): Flat
Russell 2000 (IWM): -0.6%
Away From Stocks: Fixed-income markets saw demand on the long end of the curve, with 30-year Treasury yields declining five basis points to 4.59%. Meanwhile, commodities surged—WTI crude climbed above $71 per barrel, and gold hit a record high of $3,124 per ounce. Bitcoin remained range-bound below $83,000, while volatility ticked higher, with the VIX closing north of 22.
Key Economic Events This Week
Market participants will closely monitor macroeconomic data releases, which could provide further clarity on growth prospects:
Tuesday: ISM Manufacturing data (U.S. and global) & JOLTS job openings (February)
Wednesday: Tariff announcement – Potential for market volatility
Friday: March jobs report & Fed Chair Powell’s speech
Equities Under Pressure Amid Trade Policy Uncertainty
U.S. equities are facing significant selling pressure Sunday night with futures selling as investors grapple with policy uncertainty stemming from the White House. Market participants are anxiously awaiting clarity on potential tariffs, with Wednesday's announcement being a critical inflection point. Last week, President Trump's tariff announcement targeting automakers rattled financial markets. Over the weekend, new reports emerged indicating that the administration is considering $700 billion in tariffs, set to take effect on April 2nd. This development stems from remarks by White House trade advisor Peter Navarro and President Trump himself.
Market Sentiment and Key Mitigating Factors
Despite prevailing bearish sentiment, several factors could cushion downside risks:
U.S.-Canada Trade Relations – President Trump softened his rhetoric on Canada, stating on Friday that the country is not engaged in unfair trade practices. As the fourth-largest U.S. trade partner, Canada accounts for $420 billion in imports (13% of total U.S. imports). A more conciliatory stance could temper fears of an all-out trade war.
Tariff Concerns Weigh on Consumer Confidence – Recent polling data indicates a negative shift in consumer sentiment. A CVS survey reveals that 42% of respondents expect their financial situation to deteriorate, a stark contrast to January, when 42% anticipated improvement.
Legal and Legislative Challenges – The White House’s authority to unilaterally impose tariffs remains legally contentious. Traditionally, Congress holds tariff-setting authority, barring national security exceptions. The Wall Street Journal reports that President Trump is invoking the International Emergency Economic Powers Act (IEEPA), a move that White House legal counsel warns may trigger court challenges. Additionally, Democrats are expected to challenge the policy, creating political headwinds.
Macroeconomic Impact of Tariff Proposals
To contextualize the potential economic impact, Goldman Sachs estimates that total imports from the top 15 U.S. trading partners amount to $3.3 trillion annually. A $700 billion tariff package would equate to an effective tariff rate of approximately 20%. Analysts at Goldman Sachs project that a 15% across-the-board tariff, after accounting for exclusions, would result in a net tariff rate of 9%, elevating their recession probability forecast from 20% to 35%.
Market Reaction: Volatility Rises as Credit Markets Hold Firm
While Wednesday’s tariff announcement looms large, markets are pricing in a range of potential scenarios. The VIX index, a key measure of market volatility, has surged, reflecting heightened investor anxiety.
Notably, non-U.S. equities (China, Mexico, Europe, Canada) are outperforming U.S. stocks, despite being primary tariff targets. Meanwhile, high-yield credit markets are proving more resilient than equities. While high-yield spreads have widened from recent lows, they remain below levels observed a year ago, signaling that credit investors perceive less systemic risk compared to previous downturns.
Monetary Policy and Rate Expectations
We expect the Federal Reserve to maintain a dovish stance amid trade-related uncertainties. Futures markets now price in 3.1 rate cuts by December, up from 2.2 just ten days ago. This suggests that the market is anticipating two more cuts than the Fed’s official guidance, reflecting concerns over slowing growth and potential recession risks.
Bottom Line:
Our proprietary algorithm has issued sell signals for the following ETFs: IWM, DIA, and RSP with the dates below. However, buy signals remain active for SPY and QQQ. We are closely monitoring SPY, with a key price level at $551.50—a daily close above this price would reinforce the bullish outlook. Failure to close above this level today Monday March 31, 2025 could trigger a sell signal for the SPY and QQQ ETFs.
As of Tuesday March 25, 2025 Our proprietary algorithm has triggered buy alerts for the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ), signaling a favorable environment for accumulation in these benchmark indices. At this stage, we will begin building positions in the underlying stocks within these indexes. W.D. Gann Time Pivot & Support Price Level Holding as shown in the SPY ETF chart. Our research team believes much of the correction is already priced into the market. Our analysis indicates that the Trump administration and Federal Reserve Chair Jerome Powell are intent on avoiding a recession. This sharp market correction underscores the impact of tightening financial conditions. We are closely monitoring the IWM (Russell 2000 ETF) and RSP (Equal-Weighted S&P 500 ETF) for potential buy signals emerging very soon. March 19, 2025 Algorithmic Sell Signals & Market Trends March 3, 2025 – Sell alert triggered for S&P 500 Equal Weight RSP ETF, bringing the total to five major indexes on sell alerts. February 24, 2025 – Sell signal issued for Russell 2000 IWM ETF, confirmed by a prior weekly chart sell alert on February 21. February 24, 2025 – Dow Jones Industrial Average ETF (DIA) moved to sell condition.
