Schwab Market Update

Published as of: March 13, 2025, 9:16 a.m. ET

(Thursday market open) Despite another positive inflation reading, stocks headed lower early today as tariff worries mounted. The February Producer Price Index (PPI) showed a surprising 0% change in wholesale prices and a 0.1% drop in core PPI, which excludes volatile food and energy.

Analysts had expected headline and core readings to be up 0.3% for PPI. The positive readings likely are welcome, but Wall Street instead appeared more responsive to President Donald Trump's threat this morning for 200% tariffs on European alcoholic products.

"Additional good news on inflation data," said Cooper Howard, director, fixed income strategist at the Schwab Center for Financial Research. "However, the markets are reacting to the potential of additional tariffs. The market reaction to PPI was pretty limited even though it came in better than expected."

1. Small-cap sorrows: The Russell 2000^® (RUT) small-cap index reached seven-month lows this week and approached long-term psychological support at 2,000. It's now down about 17% from last December's three-year peak, hurt by worries about stubbornly high interest rates on the one hand and a possible U.S. recession on the other. Smaller companies are often more dependent on borrowing, making high rates a headwind. Any U.S. recession would also likely have a big impact on small companies that tend to not have much business overseas to counter U.S. weakness. On the charts, the RUT's 50-day moving average is closing in on the 200-day moving average. If 50-and 200-day averages meet, it will be what technicians call a "death cross," historically a very bearish signal, but one that hasn't been as accurate in recent years.
    
2. Rolling coal: NexGen Energy (NXE) and Cameco (CCJ) bounced on Wednesday on the news that the Trump administration plans to roll back emission limits on U.S. coal plants. Reuters reported that the rollbacks were part of a plan to reverse the Biden administration's soot reducing pollution rules. Additionally, the U.S. Environmental Protection Agency said it plans to reverse emissions rules that were forcing automakers to build more electric vehicles.
    
3. Trade war casualties: The Bank of Canada cut its benchmark interest rate 25 points on Wednesday making it the seventh consecutive cut. The trade war with the U.S. is adding to the country's woes. The Economic Policy Uncertainty Index for Canada has spiked to unprecedented levels, manufacturer's confidence about the future fell to its lowest level since April 2020 and hiring stalled. Bank of Canada Governor Tiff Macklem warned that "monetary policy cannot offset the impacts of a trade war." The risk is that inflation will rise initially in reaction to higher tariffs and then ease back if economic growth slows due to the pressure from higher prices.

• NVIDA (NVDA) looks to keep the momentum going after rallying 6.4% on Wednesday, which helped to boost the S&P 500. However, the stock was little changed ahead of the opening bell.  
   
• Intel (INTC) rallied 12% in Thursday's pre-market action after the company announced a new CEO Lip-Bu Tan. Tan was CEO of Cadence Design Systems (CDNS) for over a decade.
   
• Dollar General (DG) rallied 7.58% in pre-market trading after reporting better-than-expected earnings and despite projecting lackluster sales and 2025 earnings per share of $5.80. This is below the average analyst’s estimate of $5.85 per Reuters.
   
• American Eagle (AEO) reported its Q4 earnings in line with expectations. But lower year-over-year sales appeared to disappoint investors during the pre-market session because the stock fell 9%.
   
• Adobe (ADBE) reported earnings of $5.08 per share after the bell on Wednesday, beating the FactSet survey of $4.97. However, the stock fell 4.6% in after-hours trading because the company's AI business is failing to generate revenue and its core business is being challenged by their competitor Canva.
   
• The job market showed some resiliency as initial jobless claims came in at 220,000, lower than the consensus estimates of 225,000. Continuing claims were also lower than expected at 1,870,000 versus 1,900,000.
   
• Chances are now 99% that the Fed will keep rates paused when it meets next week, according to the CME FedWatch tool, and chances for a May rate cut continued to slip, falling to 27%. The futures market still prices in around a 77% chance that rates will be cut by at least 25 basis points by June.

Trading after the close: Regular market hours are considered 9:30 a.m. to 4 p.m. Eastern Time. But you can trade outside of these normal hours in what's known as extended-hours trading, though there's some nuance to how it works, which Schwab described in a recent explainer video.

After breaking its 106.5 resistance level at the end of 2024, the U.S. Dollar Index ($DXY) rallied to 110 against a basket of other currencies. However, it failed to hang onto these gains by falling about 4% in the month of the March to 103.82. The falling 10-year Treasury Yield (TNX) has helped to pull the dollar lower along with rising recession fears. 

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

March 14: University of Michigan Preliminary March Consumer Sentiment.
March 17: February retail sales.
March 18: February housing starts and building permits and February industrial production.
March 19: FOMC rate decision and expected earnings from General Mills (GIS).
March 20: February existing home sales, February leading indicators, and expected earnings from Darden Restaurants (DRI), FedEx (FDX), Lennar (LEN), Nike (NKE), and Micron (MU).