Stocks climbed on Monday, extending their recovery from a turbulent stretch driven by shifting trade policies and economic uncertainty. The Dow Jones Industrial Average advanced more than 350 points, lifted by strong performances in blue-chip stocks like Walmart and IBM. The S&P 500 and Nasdaq also posted consecutive gains as investors assessed the latest retail sales data, which, while softer than expected, helped ease concerns of a sharper slowdown in consumer spending. However, uncertainty surrounding President Trump’s evolving tariff policies and ongoing corporate cost-cutting measures kept markets on edge. With economic sentiment in flux and key policy decisions looming, investors remain cautious as they navigate an increasingly volatile landscape.

Key Takeaways:

  • Dow Jumps Over 350 Points as Markets Rebound: The Dow Jones Industrial Average climbed 353.44 points, or 0.85%, to close at 41,841.63, marking its second consecutive day of gains. The rally was driven by strong performances in blue-chip stocks, with Walmart and IBM leading the charge
  • S&P 500 Extends Gains, Remains in Correction Territory: The S&P 500 rose 0.64% to close at 5,675.12, building on Friday’s strong rebound. The index remains in correction territory, down more than 10% from its late February record, despite back-to-back advances. 
  • Nasdaq Rises as Tech Stocks Struggle to Recover: The Nasdaq Composite climbed 0.31% to end at 17,808.66, adding to Friday’s gains but remaining deep in correction territory. Shares of Tesla slipped 5% following a price target cut, while Nvidia and Palantir saw mixed performances as traders weighed the impact of continued market volatility on the tech sector.
  • US Retail and Housing Data Signal Economic Uncertainty: Retail sales rose 0.2% in February, reversing a sharp 1.2% decline in January, but falling short of the 0.6% increase economists had expected. Excluding autos, retail sales increased 0.3%, in line with forecasts. The softer-than-anticipated reading provided some relief to investors concerned about a sharp slowdown in consumer spending. However, consumer sentiment remains fragile, particularly in the housing market, where the National Association of Home Builders/Wells Fargo Housing Market Index dropped three points to 39 in March, its lowest level since August. 
  • European Markets Climb as German Debt Reform Vote Nears: European stocks ended Monday higher, with the Stoxx 600 index gaining 0.79% as investors awaited Germany’s crucial debt reform vote. The FTSE 100 added 47.96 points, or 0.56%, to close at 8,680.29, while France’s CAC 40 gained 43 points, or 0.53%. Italy’s FTSE MIB outperformed with a 0.95% increase, rising 367 points, while Germany’s DAX advanced 168 points, or 0.73%. The rally came as reports suggested that German lawmakers are nearing an agreement to reform the country’s debt brake rule, with a parliamentary vote expected on Tuesday. 
  • Asia-Pacific Markets Mostly Higher Amid Chinese Economic Measures: Asian markets ended the day mostly higher, with investors closely watching developments in China. Japan’s Nikkei 225 rose 0.93% to 37,396.52, while the broader Topix index gained 1.19% to 2,748.12. In South Korea, the Kospi index jumped 1.73% to 2,610.69, with the Kosdaq rising 1.26% to 743.51. Meanwhile, India’s Nifty 50 and BSE Sensex posted gains of 0.35% and 0.26%, respectively. However, China’s CSI 300 slipped 0.24% to 3,996.79 despite the government announcing a “Special Action Plan to Boost Consumption” aimed at increasing incomes and stabilising stock and real estate markets. Hong Kong’s Hang Seng Index fared better, climbing 0.77% in its final trading hour. Meanwhile, bond yields in Japan hit multi-year highs, with 40-year Japanese Government Bonds (JGBs) rising seven basis points to a record 3.007%. 
  • Treasury Yields Dip as Investors Assess Retail Sales Data: The benchmark 10-year Treasury yield fell slightly to 4.299% as investors digested the latest retail sales report. The decline follows last week’s choppy trading, with bond markets reacting to shifting expectations on Federal Reserve policy. Meanwhile, the 2-year Treasury yield edged higher by more than 3 basis points to 4.048%, reflecting continued uncertainty over the Fed’s next moves.
  • Oil Prices Rise as Trump Warns Iran Over Houthi Attacks: Oil prices edged higher after President Trump warned that the U.S. would hold Iran responsible for any future attacks by the Houthis. U.S. crude futures settled at $67.58 per barrel, up 0.6%, while Brent crude climbed 0.69% to $71.07 per barrel. Trump’s comments come amid ongoing geopolitical tensions, with traders closely monitoring potential supply disruptions in the Middle East.

FX Today:

  • Euro Edges Higher but Faces Key Resistance: EUR/USD closed at 1.0919, gaining 0.41% as the pair continued its recent upward trend. The price has climbed above the 50-day SMA at 1.0480 and the 100-day SMA at 1.0519, signalling a recovery. The next major test for the euro comes at the 200-day SMA at 1.0722, which has previously acted as strong resistance. If EUR/USD remains above 1.0900, the next target is 1.1000. However, failure to hold these levels could lead to a pullback toward 1.0800, with the 100-day SMA at 1.0519 acting as a critical support zone.
  • British Pound Nears Key Psychological Level: GBP/USD climbed 0.43% to close at 1.2993, extending its recent rally as the pound continued to gain ground. The price has decisively moved above the 50-day SMA at 1.2545 and the 100-day SMA at 1.2624, confirming a strong bullish breakout. The pair is now testing the crucial 1.3000 level, a psychological barrier that previously capped gains in September 2024. If GBP/USD manages to hold above 1.2993, the next upside target is 1.3100. However, a failure to sustain this momentum could lead to a retracement toward 1.2900, with strong support near the 200-day SMA at 1.2796. A break below this level could shift sentiment bearish, opening the door for a move toward 1.2700.
  • Australian Dollar Pushes Higher but Faces Resistance: AUD/USD advanced 1.02% to close at 0.6386, continuing its rebound after reclaiming the 50-day SMA at 0.6276. The next hurdle for the pair is the 100-day SMA at 0.6353, which is acting as immediate support. Further upside could be capped by the 200-day SMA at 0.6524, a critical long-term resistance level. The last time AUD/USD reached this area, it struggled to hold above 0.6400 before reversing lower. If the pair sustains gains above the 100-day SMA, it could attempt a breakout toward the 200-day SMA. However, if it fails to hold 0.6353, downside risks increase, with a potential retest of the 50-day SMA at 0.6276. A drop below this level could see AUD/USD resume its broader downtrend, bringing 0.6200 into focus.
  • New Zealand Dollar Gains Momentum But Faces Challenges: NZD/USD surged 1.30% to settle at 0.5822, extending its recovery. The pair has successfully moved above the 50-day SMA at 0.5672, but the 100-day SMA at 0.5750 is now acting as a key support level. In early February, NZD/USD attempted to break higher but faced strong selling pressure, ultimately falling back to 0.5600. The next major resistance is at the 200-day SMA at 0.5931, which could limit further upside in the near term. If the pair fails to hold above 0.5750, a retracement toward the 50-day SMA at 0.5672 is likely. A move below this level would signal renewed downside pressure, potentially leading to a retest of 0.5600. However, if NZD/USD maintains its current momentum, it could target 0.5931 as the next key level.
  • Gold Prices Surge Above $3,000 as Safe-Haven Demand Grows: Gold prices climbed to $3,001.29, rising 0.58% as the rally extended further. The metal remains firmly in an uptrend, trading well above its 50-day SMA at $2,837.55, the 100-day SMA at $2,745.25, and the 200-day SMA at $2,618.23. The last time gold reached the $3,000 level was in early March, when it briefly touched this mark before retreating toward $2,900. If gold decisively breaks above $3,000, the next upside target is $3,050. However, failure to sustain this level could trigger a pullback toward $2,950, with further downside support at the 50-day SMA at $2,837.55. The moving averages suggest that the trend remains firmly bullish, but a break below the 50-day SMA could indicate a deeper retracement toward the 100-day SMA at $2,745.25, which previously served as a strong support level in late January.

Market Movers:

  • Affirm Slides as Walmart Switches to Klarna: Shares of Affirm dropped 4% after it was reported that Walmart will replace the company with Klarna as its exclusive buy now, pay later provider. 
  • Incyte Falls on Disappointing Trial Results: Incyte shares tumbled 9% after phase three trial data for its skin condition treatment showed the drug was effective for less than half of participants. 
  • Norwegian Cruise Line Rallies on JPMorgan Upgrade: Norwegian Cruise Line gained 4% after JPMorgan upgraded the stock to overweight from neutral. Analysts cited resilient demand despite macroeconomic uncertainties.
  • Netflix Jumps on Monetization Optimism: Netflix rose nearly 3% after the stock upgraded to buy from neutral. Analysts highlighted the company’s stronger-than-expected ability to monetize its platform, which could drive higher profitability.
  • Intel Jumps on CEO’s Planned Share Purchase: Intel shares climbed 7% after a regulatory filing revealed that incoming CEO Lip-Bu Tan will buy $25 million worth of company shares within 30 days of his appointment, boosting investor confidence.

Stocks extended their rebound on Monday, with the Dow climbing and the S&P 500 posting back-to-back gains as investors reassessed recent market volatility. While sentiment improved, uncertainty surrounding Trump’s shifting tariff policies kept markets on edge. Meanwhile, Treasury yields dipped slightly as traders monitored shifting Federal Reserve expectations, and oil prices climbed. With European markets rallying ahead of Germany’s crucial debt reform vote and Asian equities responding to China’s economic stimulus measures, investors remain cautious about the broader global outlook.