March 25, 2025: Global Markets Diverge as U.S. Tech Slides 11%—International Markets Show Resilience

Hook

While the Nasdaq bleeds 11% since mid-February and U.S. high-yield spreads hit 3.2%, international markets are outperforming by a striking 18% YTD. Here's how traders can navigate this pivotal market rotation.

Core Analysis

Key Developments

  • S&P 500 down 5% MTD vs. consensus -2.3%, driven by tech sector weakness and mounting recession concerns
  • High-yield bond spreads widened to 3.2%, signaling growing credit risk and defensive positioning
  • Dow Jones closed at 42,583.32 (+1.42%), showing relative strength with bullish technical signals above key EMAs

Sector/Topic Breakdown

  • Technology: Tesla and Nvidia lead decline, with respective drops of -4.8% and -3.4%
  • International Markets: European stocks buoyed by Germany's €500B infrastructure initiative
  • Safe Havens: Gold reaching record highs above $3,055/oz on geopolitical tensions

Strategic Playbook

Short-Term (Traders)

  • Consider pair trades: Long developed international markets vs. short U.S. tech exposure
  • Watch for oversold bounces in quality tech names trading below 20-day EMAs

Long-Term (Investors)

  • Increase allocation to international developed markets showing relative strength
  • Build positions in gold and high-quality bonds as portfolio hedges

Forward Outlook

Catalysts

  • Upcoming PCE Index release (March 28)
  • S&P Global Flash U.S. PMI data
  • New Home Sales report

Risk Radar

  • Trade Policy Uncertainty Index at 40-year high, impacting capital spending
  • Geopolitical tensions in Ukraine and Middle East threatening supply chains