TheDrop Market Analysis, 03/14/25

Markets rallied to finish off the week.

The S&P 500 index rose 2.1%, the Dow rose 1.7%, and the Nasdaq rose by an incredible 2.6%. Furthermore, the Russell 2000 index, which usually underperforms the market, actually made an incredible showing today with an over 2.6% surge. Overall, markets were bullish today, making progress in their efforts to recover, and some stocks even setting new highs.

Markets surged for a variety of reasons. One of which was how the market was undervalued and was in need of a strong correction; due to the list of President Trump's tariffs, geopolitical tensions, and concerns over the economy, many investors sold their stocks in droves to avoid facing further tribulations in the stock market. In fact, at first many stocks plummeted by double digit margins in the span of one to two weeks. For instance, Nvidia, one of the market's largest overperformers, sank by over 30% in share price in the matter of ~7 trading days. With many of these stocks making new lows, due to the nature of the economy, these stocks were pressured to correct upward to reach fairer valuations. Inevitably that was concocted today with the massive market-wide bullish environment that sparked debate today.

Secondly was the March release of the consumer price index report (CPI), which showed cooling rates of inflation in the United States during Trump's first full months in office, February. Inflation fell from 3% to 2.8%, quite the contrary to public belief. This was evident by drastically lower energy prices, especially gas, which has reached near COVID-19 pandemic-lows in some areas of the country*. Many investors and economists believed that inflation was going to go up due to the implementation of tariffs at a wide enough scale, but with rates kept fairly high, and energy prices going down, at least for now, prices have fell. Even the price of eggs by the dozen, which recently surged due to the outbreak of bird flu, now reached new lows.

Additionally, the U.S. government averted a shutdown over spending disagreements, further fueling the surge.

Nvidia led the market today with a 5.3% rise to now $121.67 per share, up from the low $110s from earlier this week. Tesla also rose 3.9%, reflecting on its correction upward in reaction to its over 25% reduction in share price beforehand. Other previously bearish stocks like Apple and Google also made remarkable gains.

Among today's clear winners was IonQ and Rigetti, two smaller technology companies that, because of their volatile nature and corrective behaviors, respectively surged. Palantir and SoundHound, two leaders in the AI industry, both also made substantial gains. Even MicroStrategy, previously hailed as the next Nvidia, rose 13% in reaction to the bull market.

Some stocks blundered from the rest of the crowd. XPeng and other Chinese stocks fell, possibly due to the greater position of American companies as a result of tariffs, or the lessening of enthusiasm for the People's Republic of China as American inflation cools.

*Some parts of rural Ohio have reported lower prices of gas per gallon that resembled the prices of the 2020 deflationary environment of the pandemic