Market Overview

The stock market has been grappling with ongoing concerns about economic growth, corporate earnings, and tariffs. Despite these challenges, the S&P 500 rose by 0.5% and the Nasdaq Composite by 0.2%, breaking a four-week losing streak. The equal-weighted S&P 500 also saw a 0.7% increase from the previous Friday. However, worries persist, fueled by several factors, including the Federal Open Market Committee (FOMC) meeting.

FOMC Meeting Insights

• The FOMC held rates steady, keeping the federal funds target range at 4.25-4.50%.
• Fed Governor Waller dissented, not on the rate decision, but on the pace of balance sheet reduction.
• The committee decided to slow the monthly runoff of Treasury securities from $25 billion to $5 billion starting April 1, while maintaining the mortgage-backed securities runoff at $35 billion.
• The Fed acknowledged rising economic uncertainty and remains focused on its dual mandate.
• The Summary of Economic Projections (SEP) shows a lowered 2025 GDP growth forecast from 2.1% to 1.7% and an increased PCE inflation projection from 2.5% to 2.7%.
• The median estimate for the fed funds rate remains at 3.9%, indicating expectations for two rate cuts this year.

Tariff Concerns

Fed Chairman Powell mentioned that it is challenging to assess the inflation impact from tariffs, suggesting that tariffs' inflationary pressures could be temporary. The market remains vigilant about potential reciprocal tariffs being announced on April 2.

Bond Market Performance

Treasuries ended the week with solid gains. The 10-year yield decreased by six basis points to 4.25%, and the 2-year yield fell by seven basis points to 3.95%.

Guru Stock Picks

Fairholme Fund has made the following transactions:

• Reduce in JOE by 1.24%

Today's News

Boeing (BA, Financial) saw a significant boost, surging 5.2% after securing a major contract to build the U.S. Air Force's Next Generation Air Dominance fighter jet. This contract, valued at over $20 billion, marks a pivotal win for Boeing, as it aims to replace Lockheed Martin's (LMT, Financial) F-22 Raptor. The news of Boeing's contract win had a contrasting effect on Lockheed Martin, which fell by 5.1%.

Micron Technology (MU, Financial) led a decline in chip stocks, dropping 8% after reporting pricing issues that affected its gross margin, despite beating quarterly estimates. This downturn spread across the semiconductor sector, impacting GlobalFoundries (GFS), Lattice Semiconductor (LSCC), and Analog Devices (ADI), each falling about 2%. Nvidia (NVDA, Financial) and Advanced Micro Devices (AMD) also saw declines of nearly 2%.

Cleveland-Cliffs (CLF, Financial) fell 1.8% as the company announced it would temporarily idle two Minnesota factories, affecting 630 workers. The closures aim to address working capital needs and manage excess pellet inventory amid ongoing trade tariff impacts.

Paramount Global (PARA, Financial) and Verizon Communications (VZ, Financial) face potential hurdles in their merger and acquisition activities due to regulatory scrutiny over diversity, equity, and inclusion (DEI) policies. FCC Chairman Brendan Carr indicated that such policies might impact approval processes, specifically mentioning Paramount's merger with Skydance Media and Verizon's acquisition of Frontier Communications (FYBR).

Telus (TU, Financial) shares fell 5% following a downgrade by Bank of America, which cited challenges such as unsustainable leverage and a high dividend payout ratio. The downgrade reflects concerns over Telus's ability to achieve its financial targets without faster growth.

Nvidia (NVDA, Financial) experienced a share price decline post-GTC event, attributed to investor disconnect from company fundamentals. Despite a projected 57% revenue growth, concerns over application-specific integrated circuits and AI demand have weighed on investor sentiment.

Dun & Bradstreet (DNB, Financial) rose 2.6% amid reports that Clearlake Capital is nearing a $4 billion acquisition deal. The potential agreement includes a go-shop period, allowing DNB to consider other bids.

FedEx (FDX, Financial) shares dropped 6% after cutting its fiscal year 2025 outlook, citing ongoing weakness in the U.S. industrial economy. The revised guidance follows mixed third-quarter results and has prompted further investor caution.

BYD (BYDDF, Financial) has brought attention back to EV charging with its development of an ultra-fast charger. This advancement highlights BYD's growing market share in China, alongside its partnerships with companies like Nio (NIO) and CATL.

GuruFocus Stock Analysis

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