Wall Street Struggles as Bessent Downplays Sell-Off and Retail Sales Disappoint

Markets Attempt Rebound Amid Economic Concerns

U.S. stocks saw mixed performance on Monday as investors reacted to downbeat economic data and comments from Treasury Secretary Scott Bessent, adding to ongoing uncertainty ahead of this week’s Federal Reserve policy meeting.

The S&P 500 hovered just above the flat line, the Dow Jones Industrial Average climbed 0.4%, while the Nasdaq Composite fell 0.5%. These movements followed last week’s sharp sell-off, which saw the S&P 500 enter correction territory and the Dow post its worst weekly performance since March 2023.

Market sentiment remains fragile as fears of an economic slowdown mount, exacerbated by the unpredictability of President Donald Trump’s tariff policies.

Bessent’s Comments Add to Market Jitters

Treasury Secretary Scott Bessent fueled further uncertainty on Sunday when he dismissed recent stock market losses, stating that “corrections are healthy” and emphasizing that there are “no guarantees” the U.S. will avoid a recession. While some investors may agree with his view on market corrections, his comments did little to reassure traders already skittish about deteriorating economic indicators.

Retail Sales Miss Expectations, Manufacturing Data Weakens

Fresh economic data further pressured investor sentiment:

• Retail sales rose 0.2% in February, well below the 0.6% forecast. Additionally, January’s sales decline was revised downward from -0.9% to -1.2%, suggesting weaker-than-expected consumer spending.

• The New York Federal Reserve’s manufacturing index plunged to -20 in March from 5.7 in February, marking a sharp downturn in business conditions.

The retail sales miss boosted investor expectations for Federal Reserve rate cuts later this year, as signs of economic softening typically increase the likelihood of monetary easing.

Federal Reserve Meeting in Focus

All eyes are now on the Federal Reserve’s two-day meeting starting Tuesday. While the central bank is widely expected to keep interest rates unchanged, investors will be scrutinizing Fed Chair Jerome Powell’s comments for any indications that Trump’s economic policies are influencing the Fed’s outlook on future rate decisions.

Tech Giants Struggle, Weighing on Nasdaq

The so-called "Magnificent Seven" technology stocks—Nvidia, Alphabet, Amazon, Meta, Apple, Microsoft, and Tesla—were all in the red on Monday morning, dragging down the broader market.

• Apple, Amazon, Meta, and Nvidia each fell more than 1%.

• Tesla tumbled 5%, extending its recent struggles.

Wall Street strategists have warned that the broader market’s recovery will depend on a rebound in these high-growth tech giants. Citi’s U.S. equity strategist Scott Chronert emphasized, “For the market to go higher from here, you need the broadening thesis to happen, but you need your Magnificent Seven to contribute.”

Nvidia Stock Slides Ahead of AI Chip Event

Nvidia’s stock dropped 2% ahead of its GTC conference on March 18, where CEO Jensen Huang is set to unveil the next-generation Blackwell Ultra AI chip and the Vera Rubin AI superchip.

The decline comes despite Nvidia’s 8% gain last week, including a 5% surge on Friday, as investors tried to recover from the company’s recent post-earnings slump.

Guess? Surges 27% on Takeover Proposal

Shares of clothing retailer Guess? (GES) soared 27% Monday after the company announced a non-binding proposal from WHP Global to take the company private at $13 per share. The stock was trading just above $12 at mid-morning.

Trump’s Liquor Tariffs Could Cost U.S. Alcohol Producers

The Trump administration’s escalating trade war has now extended to the liquor industry, with the European Union threatening a 50% tariff on American whiskey in retaliation for new U.S. steel and aluminum tariffs. In response, Trump has warned of a 200% surcharge on European wine, champagne, and spirits.

The potential trade war could have significant financial implications for major alcohol producers:

• Brown-Forman (BF-B), which owns Jack Daniels and Woodford Reserve, could see a $0.36 per share earnings hit, according to Evercore analyst Robert Ottenstein.

• Diageo (DEO), the global spirits giant, also faces substantial risks given its exposure to both European and American markets.

Homebuilder Confidence Hits Seven-Month Low

The housing market is feeling the effects of economic uncertainty and rising costs. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index fell to 39 in March, down three points from February and marking the lowest reading in seven months.

A reading below 50 signals that more builders view conditions as poor rather than good. Builders are grappling with high material costs, concerns over new tariffs, and the broader economic slowdown, all of which have contributed to declining sentiment.

Conclusion

The stock market remains volatile as investors navigate economic slowdown concerns, Trump’s aggressive trade policies, and the Federal Reserve’s upcoming meeting. While rate cut hopes are offering some support, tech sector weakness and worsening economic indicators continue to weigh on sentiment.

As markets seek stability, the trajectory of the Magnificent Seven tech stocks, the Fed’s policy stance, and potential shifts in Trump’s tariff strategy will be critical in shaping the path forward.