U.S. Stock Market Slides Amid Tariff Concerns And Fed Updates

On March 21, 2025, the New York stock market closed with a slight decline as concerns over tariff policies and economic uncertainty continued to loom.

The Dow Jones Industrial Average closed at 41,953.32, down 11.31 points (0.03%). The S&P 500 index fell by 12.4 points (0.22%), finishing at 5,662.89, while the Nasdaq Composite index saw a decline of 59.16 points (0.33%), closing at 17,691.63.

Despite an increase in existing home sales, which rose unexpectedly by 4.2% month-over-month to 4.26 million units in February — surpassing the forecast of 3.95 million — the market struggled to maintain positive momentum. Investors had hoped the report might boost market sentiment.

Meanwhile, initial jobless claims for the week of March 9-15 had also been better than expected, with 223,000 claims filed, slightly below the forecast of 224,000.

Despite these seemingly positive indicators, the stock market's anxiety over tariffs led to fluctuations that ultimately resulted in the downward close. The expiration of $4.05 trillion in options, known as 'Triple Witching Day', on March 21 contributed to the market's volatility.

On March 20, Federal Reserve (Fed) Chairman Jerome Powell kept the interest rates steady at 4.25% to 4.5% while maintaining a two-rate cut forecast for the year. However, the Fed revised its GDP growth forecast for 2025 downward from 2.1% to 1.7%, while raising the inflation forecast for the year from 2.5% to 2.8%. The Fed's adjustments signaled concerns regarding potential stagflation — a combination of stagnant economic growth and rising inflation.

Powell characterized inflation resulting from tariff policies as 'transitory', assuring that the likelihood of a recession is low, stating, "Our policy is positioned well to respond to upcoming developments."6this message aimed to calm investor nerves.

However, with looming tariff implementation announced by former President Donald Trump on April 2, further market volatility seems likely. Powell's statement was reported by multiple outlets and highlighted ongoing concerns regarding tariff-induced price increases.

Investor sentiment remained mixed as U.S. major stocks had dismal performances on March 20. While Nvidia's stock increased by 0.8% on the same day, notable declines were seen in stocks like Apple (down 0.5%), Microsoft's (down 0.2%), Amazon (down 0.3%), and Google's parent company Alphabet (down 0.6%). Broadcom's stock decreased by 2.2% while Netflix's fell by 0.9%. In contrast, Nvidia's executives noted during a conference, led by CEO Jensen Huang, that the company plans to allocate approximately $500 billion towards semiconductor and electronic manufacturing over the next four years.

Notably, Nvidia's growth contrasted with a drop of 0.6% in the Philadelphia Semiconductor Index, which closed at 4,601.37 on the same day.

The bond market reflected somewhat similar trends, with the 10-year U.S. Treasury yield decreasing by 1bp to 4.24%. Similarly, the 2-year Treasury yield decreased by 1bp to 3.96%.

The Dow Jones index and other major benchmarks, after showing gains earlier that day, succumbed to the profit-taking sentiment driven by uncertainty regarding tariffs and overall economic conditions.

Wall Street analysts have commented on the situation, with Morgan Stanley's Danny Skelly clarifying that while there’s the possibility of recent market adjustments stabilizing, broader policy uncertainties remain. He stated, “The recent adjustments might likely be at a bottom; however, the end of volatility seems out of sight.”

As the market braces for what lies ahead, investors are more cautious, with some experts suggesting that fears over recession have not completely dissipated. The uncertainty around tariff impacts keeps the financial markets on edge.

In conclusion, the interplay of prevailing economic conditions, recent statements from the Fed, and growing anticipations of labor market dynamics, coupled with persistent tariff uncertainties, ensures that investors will likely remain vigilant in the forthcoming trading sessions.