Last Week
In the words of Yogi Berra, “It’s deja vu all over again” as the market slumped to a four-week losing streak, and trade war and economic downturn concerns continued to unnerve investors. “I don’t like Mondays” was in fashion as trading kicked off with 2025’s biggest selloff, as the S&P 500 dropped nearly 3% and the Nasdaq Composite lost 4%. The selling intensified through Thursday’s close, reaching correction territory. President Donald Trump ratcheted his aggressive rhetoric with our top trading partners, and a potential government shutdown compounded the jitters. There was a decent rally on Friday, as a last-minute deal averted the shutdown, and short sellers likely covered their positions to pocket their gains going into the weekend. The risk of being out of the market or short the market is that the narrative could change in the blink of a tweet. The actual economy has been healthy, with full employment, moderating inflation, and record GDP and corporate profits. The market “bump” from November has been completely leveled, and the weekly slump resulted in a 2.3% loss in the S&P 500, a 2.4% slide for the Nasdaq Composite, and the Russell 2000 shed 1.5%. Declining issues doubled advancing issues, with the Oil & Gas and Utility sectors finishing in the green. The yield on the 10-year Treasury inched down a few basis points, with a steady dollar and gold reaching new record highs.
During the week, the economic news was mixed, as the consumer and producer inflation reports for February were softer than expected. On the other hand, Sentiment continued to deteriorate, with the University of Michigan Consumer Sentiment Index dropping to 57.9, the lowest level since November 2022, from a final reading of 64.7 in February. The weakness in sentiment this month reflected a deterioration in expectations for the future across multiple facets of the economy, including personal finances, employment, inflation, business conditions, and the stock market. In short, both Republicans and Democrats are expressing their concerns over the disruptions from the tariff and DOGE chaos.
This Week
The Census Bureau will report retail sales data for February on Monday. Thus far, the U.S. consumer has continued to spend despite sinking consumer confidence readings.
The FOMC will almost certainly keep interest rates unchanged when it announces its monetary policy decision on Wednesday. The tone of the committee’s stance towards future rate cuts will be widely analyzed. A more dovish stance could comfort investors.
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