To The Moon

Wall Street had a rough session as mounting economic concerns sent stocks tumbling, marking the worst single-day decline since December 18. The Dow Jones Industrial Average plunged 750 points (-1.7%), while the $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ fell 1.7% and 2.5%, respectively.

Index perf week

$Tesla Motors(TSLA)$ $Palantir Technologies Inc.(PLTR)$ $Alibaba(BABA)$ $NVIDIA(NVDA)$

📉 What’s Behind the Selloff?

Markets entered risk-off mode, with investors dumping equities in favor of safer assets like Treasuries and consumer staples stocks. Several key factors triggered the sharp decline:

1️⃣ Weak Economic Data

• S&P Global’s manufacturing and services surveys came in below expectations, raising concerns about slowing economic growth.

• The service sector's weakness was particularly worrisome, as it suggests that policy uncertainty, inflation, and trade disruptions may be starting to impact real economic activity.

2️⃣ Walmart’s Downbeat Outlook Weighs on Sentiment

• After Walmart’s cautious guidance last week, investors are increasingly worried about consumer spending and broader economic momentum.

• Retail stocks continued to slump, with Target and other major chains falling alongside Walmart.

3️⃣ DOJ Investigation into UnitedHealth

• UnitedHealth Group (UNH) fell sharply after a Wall Street Journal report revealed the Department of Justice is investigating its Medicare billing practices.

• The stock’s plunge erased 221 points from the Dow, adding to the day’s losses.

4️⃣ Inflation Expectations on the Rise

• University of Michigan’s consumer survey showed long-term inflation expectations at their highest level since 1995 (3.5% annualized).

• Rising inflation fears are being fueled by President Trump’s tariff threats, which could lead to higher costs for consumers and businesses alike.

• Additionally, over half of consumers now expect unemployment to rise, a level not seen since 2020.

Inflation

📉 Bond Yields Drop Amid Flight to Safety

With risk appetite fading, investors rushed into bonds, pushing yields lower:

• 2-year Treasury yield: 🔻 4.19% (down from 4.3%)

• 10-year Treasury yield: 🔻 4.42%

The bond market is now pricing in a 63.7% chance of a Fed rate cut in the first half of the year, up from 50.4% last week. However, the key question remains: Will the Fed cut rates due to falling inflation or economic slowdown?

🛢️ Commodities & Global Trade Tensions

Energy prices rose as geopolitical risks and trade uncertainties dominated headlines:

• Brent crude: $76.10

• WTI crude: $72.10

Key drivers:

• European sanctions on Russia’s “ghost fleet” put upward pressure on oil prices.

• OPEC+ is considering delaying its planned production increase in April.

• US-Russia-Saudi Arabia talks could impact future oil production and trade policies.

Meanwhile, gold surged for the eighth consecutive week, trading near $2932, as investors sought safe-haven assets amid market volatility.

🔮 What’s Next?

Markets will closely watch: Fed’s preferred inflation gauge next week to assess future rate moves. Retail earnings from Target & Costco for insights into consumer health. Geopolitical developments in Ukraine & US trade policy to gauge economic risks.

After hitting record highs just last week, markets are now reassessing risk—and volatility could remain elevated as investors digest incoming economic data.

$VIX

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.