Stock Market Update Wednesday March 26, 2025

Stock Market Update Wednesday March 26, 2025 Equities came under renewed selling pressure as weakening consumer sentiment data and escalating tariff concerns—this time targeting the auto sector—weighed on risk appetite. The S&P 500 declined 1.2%, the Nasdaq 100 dropped 1.8%, and the Russell 2000 slipped 1.1%, reflecting broad-based risk aversion.

Mega-cap technology stocks led the downturn, with Amazon (AMZN) underperforming, while high-beta momentum names such as Nvidia (NVDA) and Tesla (TSLA) also retraced recent gains. Defensive rotation was evident, as investors sought shelter in consumer staples, with Coca-Cola (KO), Procter & Gamble (PG), and McDonald's (MCD) posting gains.

Away From Stocks:

Despite the risk-off sentiment in equities, Treasuries exhibited resilience, with the 10-year yield ticking up to 4.35%, signaling steady demand amid shifting rate expectations. In the commodities space, crude oil edged higher, climbing to $69.73 per barrel, as supply concerns provided underlying support.

$NVDA is now trading at 19.7x next year EPS multiple. Historically, Nvidia ($NVDA) has traded at a much higher forward P/E multiple due to its strong growth and dominance in AI and data centers. A 19.7x forward EPS multiple seems low compared to its recent valuation levels, where it has often traded above 30x-40x.

Whether it’s cheap depends on a few factors:

• Earnings Growth: If Nvidia can sustain high double-digit or triple-digit earnings growth, this valuation looks attractive.

• AI & Data Center Demand: Any slowdown in AI spending or chip cycles could justify the lower multiple.

• Comparative Valuation: Compared to peers like AMD and Broadcom, 19.7x is on the lower end, but relative to historical NVDA multiples, it could signal undervaluation.

If growth holds up, this could be a strong buying opportunity.

Nvidia Stock NVDA Daily Chart

The Conference Board’s Consumer Confidence Survey was released yesterday, revealing mixed signals about economic sentiment. While consumers’ perceptions of current conditions and near-term outlook were largely in line with forecasts—albeit slightly weaker—one striking development was the sharp decline in expectations for future economic conditions, which plunged to 65.2. This marks the same level seen when Fed Chair Powell initiated aggressive monetary tightening to combat inflation.

Additionally, one-year consumer inflation expectations climbed to 5.1%, aligning with the University of Michigan’s prior month reading.

Discrepancy Between Consumer Sentiment and Market Fundamentals

This raises a key question: Why does consumer sentiment remain weak despite falling prices in key categories? The Conference Board attributes this disconnect to political concerns, including perceptions of government policies, inflation risks, and trade uncertainties. Tariff policy remains a particular point of concern, making April 2nd—the anticipated date for tariff announcements—a pivotal moment for market outlooks. Our expectation is that these tariff measures will be less restrictive than feared, mitigating potential market disruptions.

Stock Market Sentiment Hits a Historic Low—A Contrarian Opportunity?

A particularly notable survey finding is the decline in consumer expectations for stock market appreciation over the next year. Only 37% of respondents now anticipate higher equity prices, representing the sharpest two-month drop in the survey’s 40-year history.