Market Monitor March 10 ( Kratos Defense & Security UP, Tesla, Microstrategy, Robinhood & Coinbase DOWN)

Wall Street Faces Heavy Losses Amid Recession Fears and Tech Sell-Off

The U.S. stock markets suffered a significant downturn on Monday, with the technology sector experiencing its worst single-day loss since 2022. Investors reacted to increasing recession concerns, amplified by former President Donald Trump’s acknowledgment that an economic downturn in 2025 is possible.

His unpredictable trade policies, particularly the potential for higher tariffs, further fueled uncertainty.

The Nasdaq Composite plunged 4%, marking its steepest decline in over two years, while the S&P 500 and Dow Jones Industrial Average fell 2.7% and 2.1%, respectively.

Tech Stocks Under Pressure

Big tech stocks, typically considered resilient due to their cash reserves, suffered as investors reassessed valuations. Analysts suggest that uncertainty over AI profitability, economic slowdown risks, and regulatory concerns contributed to the decline.

Major technology stocks bore the brunt of the sell-off. Companies like Apple (AAPL | -4.8%), Microsoft (MSFT | -3.3%), Amazon (AMZN | -2.4%), Alphabet (GOOG | -4.6%), Meta (META | -4.4%), and Nvidia (NVDA | -5.1%) saw significant losses as investors took profits from stocks that had performed well in previous years.

Additionally, Tesla (TSLA | -15.4%) saw its stock plummet, continuing a seven-week losing streak, with concerns over CEO Elon Musk’s political involvement adding to investor unease. Since the start of the year, Tesla has lost 40% of its value.

Broader Market Uncertainty

The sell-off extended beyond tech. Companies linked to cryptocurrency, including MicroStrategy (MSTR | -16.7%), Coinbase (COIN | -17.6%), and Robinhood Markets (HOOD | -20%), saw heavy declines after Trump announced plans to create a strategic Bitcoin reserve through confiscated assets rather than market purchases.

Investor sentiment was further dampened by Federal Reserve Chairman Jerome Powell’s indication that interest rate cuts are not imminent. Market participants are now closely watching U.S. inflation data, which could influence future rate decisions.

Concerns over rising tariffs also persist, with potential increases up to 20% causing unease among consumers and businesses alike.

One of the few stocks that moved smoothly higher was Kratos Defense & Security (KTOS | +6.9%). The company announced today that its OpenEdge 2500 digitizer, which is integration-capable and part of the OpenSpace® family of dynamic ground systems, is officially DIFI-compliant, one of the first two products in the industry to achieve this recognized status.

Capital Flowing Out of the U.S.

In contrast to previous periods of market turmoil, the U.S. dollar weakened instead of strengthening, as investors redirected capital towards Europe. Analysts attribute this shift to growing skepticism about the stability of U.S. economic policies and geopolitical strategy.

Looking Ahead

While some strategists foresee further downside, others remain cautiously optimistic about the long-term outlook for U.S. stocks, expecting potential fiscal stimulus measures and tax cuts to provide future support.

Despite this, continued volatility is expected in the near term as investors digest economic data, Federal Reserve policy and political developments.

Daily Market Analysis – March 07, 2025 (After Market Close)

SPY (S&P 500 ETF)

• The short-term trend is bearish, with a -3.97% decline over the past week and a significant drop of -6.69% over the past month. This shows increasing downward pressure.
• The medium-term trend has also weakened, with a decline of -7.22% over the last three months.
• The long-term trend remains neutral, up +9.95% over the past year.

Key Price Levels:

• The horizontal support line at $565 marks an important level for SPY. This level is crucial to monitor and yesterday's close was below it.

• The downtrend in the short and medium term suggests that the ETF might struggle to regain its footing unless it finds support at this level (close above $565).

QQQ (Nasdaq 100 ETF)

• The short-term trend is strongly bearish, with a -4.49% drop this week and a -9.67% decline over the past two weeks.
• The medium-term trend is also weak, with a -10.89% loss over the past three months. Despite these declines, the long-term trend remains neutral for now (+8.94% in the last 12 months).

Key Price Levels:

• The current breakdown below $485 could lead to further declines towards $440, especially considering the weak trends in the short and medium terms.

IWM (Russell 2000 ETF)

• Short-term trend: IWM is also in a downtrend, with a -3.84% decline this week and a -7.15% drop over the past two weeks.
• Medium-term trend: Over the last month, IWM has dropped by -11.16%, signaling weakness in small-cap stocks.
• Long-term trend: The ETF is showing a significant -13.86% loss over the last three months, indicating an overall bearish outlook in the small-cap market.

Key Price Levels:

• The horizontal support at around $200 is essential. If this support fails, IWM could move towards $185 or lower, particularly given the negative short and medium-term trends.
• A break above $210 might indicate a potential recovery, but the long-term trend suggests more caution.

Sector Analysis

• Next update (weekly) on friday, march 14

Market Breadth Analysis for March 10, 2025

• Advancing Stocks: On March 10, only 17.7% of stocks advanced, a sharp decrease from earlier in the week, highlighting broad weakness.

• Declining Stocks: 80.9% of stocks declined, which reflects the overall bearish sentiment in the market on this day.

• Comparison to Previous Week: The breadth data for March 10 is notably worse than the week before, this shift indicates growing selling pressure, particularly on March 10, and suggests that the market sentiment is turning increasingly negative.

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Conclusion

• The US ETFs (SPY, QQQ, and IWM) are all showing weak short, medium- and longterm trends, with IWM experiencing the most significant losses.
• The key support levels for each ETF are under pressure, and any sustained break below these levels could signal further downside.
• Market breadth on March 10 indicates a shift to a more bearish sentiment, with a higher percentage of declining stocks, signaling that the selling pressure may continue in the near term.
• The overall outlook for the market is cautious, with a focus on watching key support levels to gauge whether any rebound or reversal is possible. The negative breadth data further confirms that the market is currently facing significant challenges.