Market Comeback: The S&P 500 Climbs Out of Correction On Investor Relief

The S&P 500 followed the Nasdaq into correction territory yesterday. The SPY on Thursday closed down -1.39%. Most other stock indexes also fell as escalating trade tensions spooked investors more as President Trump said he would not back off on steel and aluminum tariffs. He also indicated that reciprocal tariffs would remain in place and go into effect on April 2.

However, the S&P 500 has since recovered from correction territory due to government shutdown fears easing. Some stocks have made a recovery from their earlier declines, and investors have waited for consumer sentiment data from the University of Michigan. This came in at 57.9 vs. a 63.1 forecast, so the market may move lower from here.

Here is a market update as of 12:30 PM (ET) today.

• S&P 500 is up 87.36 points (+1.58%)
• Nasdaq Composite is up 350.5 points (+2.02%)
• Dow Jones Industrial Average is up 484.58 points (+1.19%)

Government Shutdown Fears Ease

Investors are still spooked about the trade wars and a potential recession, but stocks have continued rallying as the threat of a U.S. government shutdown eased. Senate Democratic leader Chuck Schumer said he will not block a continuing resolution (CR) to fund the government for 6 months.

In the meantime, oil has gained due to ceasefire hopes in Ukraine fading. Vladimir Putin rejected an immediate ceasefire. On the other hand, natural gas futures are still red despite rebounding yesterday.

China stocks have also rallied due to officials from its finance and commerce ministries planning to announce measures to boost consumption at a press conference on Monday.

The University of Michigan’s Consumer Sentiment Report

The consumer sentiment decline marks the third consecutive monthly decline and has erased all post-election gains from late 2024. It also spanned all demographics.

Moreover, UMich expects a surge in inflation to 4.9% (expected change in over the next year, median) due to tariff impact, compared to the Fed’s projection of 3.13% (Inflation expectations median, 1 year ahead of expected inflation rate.)

It is the lowest level since 2022.

Government Shutdown Risk Dissipates, But Not Completely

While Chuck Schumer has said he would not block measures to avoid a shutdown. However, Republicans still need 8 Democrats to side with them in order to get past to 60-vote filibuster threshold.

According to a recent WSJ piece, more than half of the Democratic caucus have already indicated that they would vote to block the legislation, so the risk of a shutdown is still there. There’s a possibility that the Democrats could pressure Schumer to backtrack.

Most Magnificent 7 Stocks Up

Nvidia (NASDAQ: NVDA), Tesla (NASDAQ: TSLA), Palantir (NASDAQ: PLTR), Apple (NASDAQ: AAPL), and Meta Platforms (NASDAQ: META) are leading the charts in terms of trading volume.

NVDA’s gains are part of a broader recovery from its trough on March 10. The same can be said about PLTR and TSLA. AAPL and META are the odd ones out, since the stock is down.

AAPL is down due to it announcing that it would delay rollout of its AI-powered Siri upgrades until 2026.

META has stayed mostly flat this trading week due to trade war and AI concerns. The company could take a big hit from retaliatory measures since it derives a lot of its revenue from outside the U.S., and it also is betting big on AI.

PLTR has recovered over 7.3%, and Micron (NASDAQ: MU) has continued its March rally to over $100. Its AIPCon event on March 13 revealed 17 new clients.

Strategy (NASDAQ: MSTR) is also up as BTC gains. The company is going all-in on Bitcoin, as it previously announced that it will raise $21 billion.

By Omor Ibne Ehsan