Tough Week In The Market
Stocks fell hard in the first week of March as investors digested another busy week of earnings, economic, and political news. The Nasdaq is flirting with correction territory which is a 10% decline from a recent high. Meanwhile, the small-cap Russell 2000 is flirting with bear market territory and is down almost 20% from its recent high. This isn’t a gentle pullback—it’s a hard fall, driven by tariff fears, economic jitters, and a tech sector that’s losing its shine. Yet, amid the wreckage, there’s a case to be made: the market’s oversold and due for a bounce. If it can’t bounce, look out below—things could get uglier fast.
This Week’s Bloodbath
On Monday, stocks opened higher but closed lower after President Donald Trump doubled down on his tariff agenda, confirming 25% duties on Canada and Mexico starting April 1, alongside a 10% tariff on China.
Stocks fell again Tuesday as tariff uncertainty sent stocks lower. After the close, the Commerce Secretary floated the idea that an extension may occur for some areas and futures rallied. On Tuesday evening, Trump addressed a joint session of Congress and made a bullish case for all his accomplishments since he took office.
On Wednesday we had a short-lived midweek rally, sparked by rumors of tariff exemptions for auto manufacturers. However, sellers showed up on Thursday and sent stocks much lower.
Before Friday’s open, the government said U.S. employers added a seasonally adjusted 151,000 last month. That was better than the downwardly revised 125,000 in January but lower than the 170,000 consensus forecast. A few hours later, Chair Jay Powell said the Federal Reserve will focus on its dual mandate and not focus on the “noise.” The opened lower on Friday but turned higher as the bulls try to defend the longer-term 200 DMA line and help the market bounce from deeply oversold levels.
Why It Fell So Hard
Trump’s tariffs kicked in this week and those spooked markets. Canada and Mexico supply critical inputs—think auto parts and steel—and a 25% tax could hurt production and increase costs. China’s tariffs hit many other areas and all this could hurt corporate profits going forward. Goldman Sachs warned of a “tariff shock” shaving 1% off GDP growth if unresolved, and JPMorgan flagged a “profit recession” risk for multinationals.
Oversold And Ready To Bounce?
Here’s the flip side: the market’s screaming oversold. The CNN Fear And Greed Index, is at extreme pessimism which usually happens after a big move down and signals a bounce could be near. Other technical indicators are also oversold, suggesting the market can easily bounce from here.
If No Bounce, Look Out Below
What if we don’t bounce? We can easily have another leg down.
The S&P 500 is trading near its 200-day moving average and if it can’t hold, we can easily have another leg down. The small-cap Russell 2000 is almost in bear market territory and it will not take much for it to fall into a bear market.
Next Week’s Playbook
On the economic front, the big focus next week will be inflation and retail sales.
Next week, we have retail sales, the Consumer Price Index, and the Producer Price Index. On Friday we have the industrial production and the University of Michigan Consumer Sentiment Index.
Trump will meet with Canada’s Justin Trudeau midweek and that could move the needle, plus any other news on the tariff front.
Defense Is Key
Defense is key until the bulls regain control of the market.
I would be remiss not to note that many international stock markets are outperforming U.S. stocks in 2025. Additionally, gold remains strong and is on the verge of breaking out to new record highs.