Financial Market Update – Week of 04/21

Last week brought more tariff and interest rate developments, along with strong retail sales numbers. Read on for a bite-sized overview of what you should know.

Weekly Stock Index Performance

Major U.S. stock indexes traded modestly lower last week as tariff uncertainty persisted and export restrictions on semiconductor chips were announced.

• The S&P 500 finished the week lower by 1.50%.
• The Dow Jones Industrial Average fell by 2.66% for the week. 
• The Nasdaq 100 declined by 2.31% last week.

Retail Clearance Sale

• The advanced estimate for March Retail Sales data showed a rise of 1.4% for the month, beating Dow Jones estimates of 1.2% — a large increase from February’s monthly increase of 0.2%. Motor vehicles and parts dealers in particular saw a surge in sales. 
• Some analysts described it as akin to a “gigantic clearance sale” before tariff-impacted pricing, with the broad expectation for prices to be higher a year from now.  Could consumers be overly fearful of higher prices to come?

Interest(ing) Rates

• The European Central Bank (ECB) cut interest rates last week, leaving a feeling that the central bank has left the door open for more rate cuts while President Trump is urging Federal Reserve Chair Jerome Powell to do the same here at home. The drama between the two continues to pick up steam.
• Looking at rate cut probabilities in the U.S based on futures markets, there is an 86.2% chance of no change in interest rates at the May Fed meeting, leaving only a 13.8% chance of a quarter-point rate cut according to the CME FedWatch Tool at the close of last week. 
• The ECB’s benchmark deposit rate sits at 2.25%, while the U.S. benchmark overnight lending rate currently sits at 4.33%.

Trade Tensions: Dollar Down, Gold Up

• The gold rally continued amidst trade tensions last week, with all-time highs made last week as the shiny yellow metal crossed the $3300 level. That’s a nearly 25% gain this year alone for the price of spot gold. 
• On the other hand, the U.S. dollar has fallen somewhat sharply in 2025, with the U.S. Dollar Index (DXY) falling to three-year lows. The U.S. Dollar Index measures the U.S. Dollar’s strength against a basket of six major currencies. Trade tensions and uncertainty are factors.

The Week Ahead

• It’s a quiet week for economic data releases this week, with some Flash Manufacturing and Services data on Wednesday. Eyes will continue to be glued on tariff-related developments and earnings season in its early stages.

That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last week brought volatile major U.S. stock indexes finishing higher for the week and some further improvement in consumer inflation, making this a good time to offer an overview of key developments. Read on for a bite-sized summary of what you should know.

Stock Index Performance

• The S&P 500 added 5.70%.
• The Dow Jones Industrial Average rose by 4.95%.
• The Nasdaq 100 increased by 7.43%.

Up & Down Volatility

• It was a wild ride on Wall Street last week, with major stock indexes clawing back at recent losses on the heels of some mid-week tariff relief. Major stock indexes posted some record breakers to the upside last week, including the Dow Jones and the S&P 500 having their best weeks since 2023.
• Market volatility was extreme, spiking to start the week and cooling down towards the end of the week in what will be remembered as one of the most volatile weeks ever.

Inflation Improvement 

• March Consumer Price Index (CPI) reported an annual inflation rate of 2.4%, a decline of 0.1% from the previous month and down from 2.8% in February, marking a six-month low. This data was better than the Dow Jones estimates, which predicted an inflation rate of 2.6%.
• Meanwhile, Core CPI, which excludes food and energy prices, reached a four-year low in March. This development is encouraging news, especially considering the ongoing concerns about inflation due to tariffs.

Gold, Bond Volatility & Earnings 

• Gold bugs are pleased with the ongoing rally, as the spot price of the yellow metal continued to rise last week, eclipsing $3,200 per troy ounce, driven by trade uncertainty and other factors. 
• While gold traded higher last week, government bond prices sank sharply, with government bond interest rates rising in a volatile fashion.
• Let’s also not forget earnings — overshadowed by tariffs, yes, but a fundamental driver of equity markets indeed. Earnings season began last Friday, and the S&P 500 is expected to report Q1 earnings growth of 7.3%, with some analysts seeing the S&P 500 likely reporting earnings growth above 10% for Q1. If Q1 earnings growth exceeds 7.3%, it would mark the seventh consecutive quarter of (year-over-year) earnings growth for the large-cap index. Food for thought during these volatile times. 

The Week Ahead

• Q1 earnings reports will be rolling in this week in earnest but will likely be overshadowed by tariff and trade news flow — and movement in the bond market, as last week was quite a volatile one for bonds. 
• For economic data, this week is quieter than last week’s CPI, but we do get retail sales data on Wednesday and Federal Reserve Chair Jerome Powell speaking at the Economic Club of Chicago.

That’s it for this week’s update! If you’d like to discuss any of these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out. We are always here as a resource for you.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last month brought trade tensions and some mixed inflation readings as major U.S. stock indexes declined, making it an opportune time to share an overview of what happened and what could be ahead. Read on for a monthly summary of what you should know.

Major U.S. Stock Indexes

Here is how major U.S. stock indexes fared in March:

• The S&P 500 declined by 5.75%.
• The Nasdaq Composite fell by 8.20%. 
• The Dow Jones Industrial Average decreased by 4.20%.

Trade Tensions

• Trade and tariff tensions significantly impacted U.S. financial markets last month. The introduction of steep tariffs — 25% on imports from Canada and Mexico, along with an additional 10-20% on goods from China — ignited fears of a global trade war, leading to sharp declines in major stock indices.
• In response, retaliatory tariffs from trading partners such as the EU and Canada were announced. Those measures, along with a pullback on some of these tariffs and uncertainty regarding the scope and duration of implemented measures, created volatility and challenged investor confidence. Yet, amidst these challenges, sectors like energy displayed remarkable resilience, showcasing an apparent shift from tech to value stocks.
• Some investors have eyed international diversification in Europe, while others look more closely at defensive plays in dividend-paying stocks.

Mixed Inflation Signals

Inflation metrics presented a mixed picture in March.

Softer CPI & PPI:

• Recent developments in consumer inflation data provide a glimmer of optimism. The data released in March indicated that headline CPI increased by 2.8% year-over-year, marginally lower than the expected increase of 2.9%.
• Month-over-month, CPI recorded a 0.2% rise, lower than the 0.3% rise that was forecasted. The S&P 500 closed higher on the day of the data release, but it was not enough to help the index for the month.
• On the wholesale inflation side, data revealed no change month-over-month versus an expected increase (good, right?). Furthermore, the Core Producer Price Index (PPI) was reported to be two ticks below expectations on a monthly basis. 

Warm Core PCE

• The month’s last inflation reading (and the Fed’s preferred inflation gauge) was running a tick higher than expected in March’s data release, showing a 0.4% increase for February. This was the largest monthly gain since January 2024 and brings the 12-month inflation rate via Core PCE to 2.8%. Economists surveyed by Dow Jones had anticipated a monthly increase of 0.3% and a yearly inflation rate of 2.7%.
• Core inflation, which excludes the volatile prices of food and energy, is generally considered a more reliable indicator of long-term inflation trends, and the Fed prefers it as a gauge. The data adds a mixed feel to otherwise softer-than-expected inflation data printed in March.

Putting Inflation Together

• A 2.8% annual run rate for CPI and Core PCE is solid compared to the recent past, as it is below 3% and well below the 9.1% highs we saw in 2022. The market just expects inflation to increase – will tariffs make it happen?

Fed Meeting & Outlook

• As anticipated, the Federal Reserve kept interest rates unchanged during the March policy meeting. The Federal Reserve projects two rate cuts this year despite facing a more uncertain economic environment than before.
• Significant developments included a downward revision of the Fed’s economic growth rate forecast for 2025, alongside an upward adjustment of its inflation projections. The Federal Reserve adopted a “wait and see” approach in light of existing uncertainties related to tariffs and other factors while indicating that rate cuts may be considered later in the year.
• As of the last trading day of March, Fed Funds futures markets indicated an 85.5% probability of leaving rates unchanged again at the next meeting (early May). The probabilities shift looking ahead to the June meeting, with futures markets predicting a 64.3% chance of a quarter-point cut in June (data current as of the close of trading on March 31st).

Labor Market

• Nonfarm Payrolls: The U.S. economy added 151,000 jobs in February 2025 — slightly below the consensus expectation of 170,000 jobs. Job gains were led by sectors like health care (+52,000) and transportation and warehousing (+18,000), though federal government employment dropped by 10,000 amid the early impacts of policy shifts.
• Unemployment Rate: The unemployment rate rose to 4.1% in February 2025, up from 4.0% in January, indicating a slight softening in the labor market.
• The data reflects a labor market under pressure from trade tensions and policy uncertainty — yet one that is still growing.

Consumer Health & Mood

The U.S. consumer has seen better days.

• In March 2025, U.S. consumer confidence deteriorated sharply, as the Consumer Confidence Index dropped to 92.9, and the Expectations Index fell to 65.2 — below the recession threshold of 80 — reflecting heightened pessimism. 
• The University of Michigan Consumer Sentiment Index also fell to 57.0, down 11.9% from February, fueled by inflation fears with 1-year expectations at 5.0%. Consumers are increasingly anxious, burdened by inflation and economic uncertainty, potentially signaling recession risks and reduced spending. 
• This pensiveness might be overdone, and a catalyst for a shift — such as stabilizing inflation or clearer trade policy — could potentially restore some optimism.

April 2nd Tariff Decision

• On April 2nd, dubbed Liberation Day by President Donald Trump, the administration announced a new wave of tariffs. Market watchers were unsure of what would be announced, adding to market uncertainty in the days before the announcement.
• At 4 p.m. the president announced a minimum of 10% tariffs on all countries, with reciprocal tariffs for countries that the administration categorizes as having an uneven trade relationship.
• For the reciprocal tariffs, President Trump promised tariffs equivalent to half of what those countries charge the United States. The administration included nonmonetary tariffs (such as currency manipulation) in its calculation of the other countries’ tariffs on the United States. Examples of new tariff rates include 49% on goods from Cambodia, 54% on Chinese goods (including earlier tariffs), and 26% on Indian goods.

Remember the Goals

Amid tariff uncertainty and market reaction, it’s essential to keep our long-term goals in mind and remember the reasons we started long-term investing in the first place. The objective is to stay invested over time rather than attempting to time the market. Volatility is part of long-term investing.

Additionally, markets often anticipate future conditions when setting prices, which is why we hear phrases like “buy the fear” or “buy when there’s blood on the streets.” Are we at that point yet? Nobody knows for sure.

Contact Me Anytime

Tariff uncertainties could persist longer. If it’s on your mind, it could be an opportune time to chat about your portfolio and diversification. Let’s remember that markets do not move higher in a straight line (even though we may have gotten accustomed to that in recent years!).

If you would like to discuss the current market outlook and explore investment strategies based on your objectives or recent market developments, please feel free to contact us.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last week brought a much-anticipated Federal Reserve (Fed) meeting and monthly retail sales data, meaning there is a lot to discuss as we head into a new week. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

For the week ending 03/21/25, the S&P 500 snapped its four-week losing streak. Overall:

• The S&P 500 increased by 0.51%. 
• The Nasdaq 100 traded higher by 0.25%.
• The Dow Jones Industrial Average added 1.20%.

Fed Meeting & Outlook

• As expected, the Fed left interest rates unchanged at the March policy meeting last week. The Fed sees two rate cuts to come in 2025 despite a more uncertain outlook for the economy.
• Noteworthy developments included the Fed reducing its 2025 economic growth rate forecast and raising its inflation projection. The Fed’s tone was one of a “wait and see” approach amid tariff and other uncertainties — but with rate cuts in the back pocket later in the year.

Retail Sales Mixed

• Retail sales for February showed a mixed picture, with spending increasing by 0.2% in February (better than the revised decline of 1.2% in January). Consumer apprehension has been a theme in recent consumer-centric readings. 
• While the retail sales reading came up short of Dow Jones expectations for a 0.6% rise, major U.S. stock indexes were higher after the data release. That resilient consumer we have gotten to know and love over the years seems to be in hibernation lately.

Stock Buybacks Rise

• According to data compiled by S&P Dow Jones Indices, S&P 500 company share buybacks (when a company buys back its own stock) rose by 7.4% quarter-over-quarter in Q4 2024. NVIDIA, Apple, and Alphabet were among the top five companies in share buybacks within the S&P 500 during Q4 2024.
• The trend appears to have continued into Q1 2025, with many companies loading up on stock at recent lower prices for employee options and ahead of the lingering uncertainties currently in play. The net result could create a positive impact on Q1 2025 earnings per share (EPS), according to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

The Week Ahead

• This week, we will get Gross Domestic Product (GDP) data on Thursday, and the Fed’s preferred metric on inflation, Core Personal Consumption Expenditures (Core PCE) will be released on Friday morning. Speaking of personal consumption, those pesky egg prices have seemed to come down in recent days!
• Recent inflation data showed some signs of cooling, which raises an important consideration. While tariffs have seemed to dampen economic expectations quickly, it remains to be seen whether this will further contribute to a decline in inflation metrics in the future. Keep in mind that tariffs are expected to lead to higher prices.

That’s it for this week’s update! If you’d like to discuss these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last week brought heavy news flow out of Washington (shutdown averted!), while monthly inflation data showed some cooling. Amid all of the headlines, now is a good time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

Major U.S. stock market indexes fell decidedly for the week ending 03/14, although they settled the week well off the lows courtesy of a big rally last Friday.

• The S&P 500 decreased by 2.27%. 
• The Nasdaq 100 traded lower by 2.46%.
• The Dow Jones Industrial Average fell by 3.07%.

News Flow Heaviness

• A potential partial government shutdown was in play last week as major stock indexes touched correction territory, with some heated exchanges among lawmakers on Capitol Hill over the spending bill. However, the Senate passed the spending bill, and the shutdown was averted. 

• Economic data and Fed talk still flow, yet are buried beneath continuing tariff volatility daily. Perhaps market sentiment reached short-term oversold levels, contributing to last Friday’s rally.

Inflation Cools

• It might not seem like it, but there was some good news on inflation last week. Consumer Price Index (CPI) cooled more than expected in February. The data released last Friday showed consumer prices rose by 2.8% vs. 2.9% expected year-over-year; it also showed a 0.2% increase month-over-month vs. 0.3% expected. Good, right? Yet major stock indexes sold off heavily on the data release day,  heading higher the following day.

• On the wholesale side of inflation, expectations were for an increase in February, and the data showed no change month-over-month, with Core PPI coming in two ticks below expectations on a monthly basis. Inflation cooled on both the consumer and wholesale side in February.

Not-So Golden Consumer

• Recent reports indicate that consumers appear to be feeling overwhelmed by inflation and concerns about tariffs. Last week, the University of Michigan Consumer Sentiment data showed the lowest reading since 2022.

• Gold has seen its rally continue, with spot gold prices briefly cracking $3,000 per troy ounce on Friday of last week. It has been a heck of a run in the shiny yellow metal for the past year. 

The Week Ahead

• Remember when the markets were all about the Fed and inflation data? Things have changed quickly in tariff-infused fashion. But this week, we have the March Federal Reserve (Fed) meeting on deck. Expectations are for the Fed to leave rates unchanged, with markets pricing in a cut in June, with only a 31% chance in May as of last week.

• Let’s see if the Fed can settle some nerves, given the recent rise in volatility. With the S&P 500 trading close to correction territory, some long-term investors may find opportunities that did not exist just a month ago.

That’s it for this week’s update! As always, if you’d like to discuss any of these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last week brought heightened uncertainty over tariffs and their ultimate effects, along with a jobs number that fell short of expectations. Read on for a bite-sized summary of what you should know heading into a new week. 

Weekly Stock Index Performance

Major U.S. stock market indexes declined for the week ending March 7th: 

• The S&P 500 decreased by 3.10%. 
• The Nasdaq 100 traded lower by 3.27%.
• The Dow Jones Industrial Average fell by 2.37%.

Fluid Tariff Situation

• Tariffs were enacted last week, with Mexican and Canadian imports facing 25% duties. However, just two days later, tariffs on certain goods imported from Mexico and Canada were dialed back — set to remain tariff-free until April 2, 2025. Tariffs on Chinese imports doubled.
• The virtually nonstop uncertainty over tariffs has soured market sentiment over the past few weeks. While major U.S. stock indexes are well off their all-time highs, let’s be mindful that, as of last week’s market close, the S&P 500 is close to where it traded as November 2024 began.

Payrolls Miss

• As a tough market wore on last week, attention turned to Friday’s jobs number for a potential reprieve. 151,000 jobs were created in February, falling short of expectations for 170,000. So no love there. 
• Yet, the S&P 500 managed to put together a positive trading session on the day of the payrolls data release to close out last week. Federal Reserve Chair Jerome Powell mentioned that the economy is in good shape after the S&P 500 flirted with its 200-day moving average — a key technical level — earlier in the day and closed above it.

Market Psychology, Opportunity?

• For the market historians and technicians among us, there is some interesting data on the S&P 500 and the 200-day moving average. Of course, market timing is challenging and is deemed second place to time in the market.
• From a psychological perspective, let’s remember that the tariff announcements are not a surprise (compared to an unknown event like COVID-19, for example). Tariffs were well broadcasted in advance. However, the way the tariffs get implemented, their timelines, and their ultimate effects are somewhat unknown.
• A broader and deeper pullback could create opportunities for certain long-term investors.

The Week Ahead

• Don’t look now, but here comes Consumer Price Index (CPI) on Wednesday. Core CPI was running at a 3.3% annualized rate and 0.40% monthly rate in January, so market watchers will want to see if this hotter-than-expected inflation data carried into February. 
• The Cleveland Fed’s Nowcasts Tool shows expectations for a monthly rise of 0.23% in Headline CPI and a 0.27% monthly rise in Core CPI as of last week’s market close, so a little bit of month-over-month inflation cooling is expected.

That’s it for this week’s update! If you’d like to explore any of these topics further or have any other questions or needs, don’t hesitate to reach out.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last month brought some warm inflation readings and continuing tariff talks, which contributed to potential economic uncertainty. That makes the start of the new month a good time to share an overview of what happened and what’s ahead. Read on for a monthly summary of what you should know.

Major U.S. Stock Indexes

After a strong January to start the year, major U.S. equity indexes traded lower in February. Here’s how major U.S. stock indexes fared:

• The S&P 500 declined by 1.42%.
• The Nasdaq 100 fell by 2.76%.
• The Dow Jones Industrial Average decreased by 1.58%.

Tariff Talk

The ongoing tariff talks have been a daily topic of discussion. Here is where we are at the start of the month:

• President Trump’s proposed tariffs on Mexico and Canada are set to roll out on March 4th. Tariffs on aluminum and steel imports are scheduled for March 12th.
• An additional 10% tariff on China is expected to begin on March 4th as well (on top of the existing 10% tariff). The additional tariff is said to be due to insufficient progress on fentanyl entering the U.S. from China.
• Overall, markets held up well for the majority of February, even with ongoing tariff uncertainty. 
• The second half of the month (especially the final week) is where we saw some volatility. However, from a seasonality perspective, this is to be expected. 

CPI and PPI Show Inflation Warmth

January inflation metrics released in February ran warm overall but ended on a positive note:

• The January Consumer Price Index (CPI) showed a monthly increase of 0.5%, exceeding expectations of 0.3%, resulting in a year-over-year inflation rate of 3.0%, up from 2.9% in December.
• Initially, markets reacted negatively to the data suggesting the Federal Reserve may maintain a neutral stance longer, but stock indexes recovered by the end of the trading week of the data release.
• The January Producer Price Index (PPI) rose 0.4% for the month and 3.5% year-over-year, surpassing estimates of 0.3% and 3.2% — a hotter than expected reading. 
• Positive factors in the PPI data release were seen as likely to positively influence the then-upcoming data release of the Core Personal Consumption Expenditures (PCE) index.

Core PCE Offers Positive Data

• Markets needed some soothing or something to grab onto on the last trading day of the month, and they got just that in the form of Core PCE. Data showed a 0.3% monthly rise and a 2.6% annual rise — both in line with expectations and a step down from the previous month’s upwardly revised reading of 2.9%.
• This most recent piece of inflation data (and the Fed’s favorite measure) was the lowest reading in seven months. This data was a solid way to finish the month.

Federal Reserve (Fed) Outlook

• There was no Fed meeting in February, but we did get the minutes from the January meeting. Minutes showed concerns over the potential impacts of tariffs on inflation. As a result, the tone was one of rate cuts being on hold.
• As of the last trading day of February, Fed Funds futures markets are pricing a 93.0% probability that the Fed will leave rates unchanged at the March meeting. 
• June Fed meeting probabilities show only an 18.4% chance of an unchanged decision by the Fed, with June currently being talked about as the month for rate cuts.

Labor Market

• The nonfarm payrolls report for January shows a disappointing increase of only 143,000 jobs, below the Dow Jones forecast of 169,000. This slow growth was partly due to California wildfires and employers’ uncertainty about the policies of the new administration.
• On the bright side, December and November payroll figures were revised upward.
• While the headline jobs number fell short, the underlying data remains strong. In addition, the unemployment rate has dropped to 4.0%, and hourly wages increased.

Consumer Health & Mood

• January retail sales data showed some post-holiday hangovers, with sales declining by 0.9% for the month versus Dow Jones estimates for a 0.2% decline. Severe weather may have been partially responsible for the weak number.
• University of Michigan’s consumer sentiment data dropped to a 15-month low amid tariff uncertainty. Consumer confidence data also fell to its lowest reading since 2021.

Spring Ahead

The financial markets absorbed the weight of nearly constant tariff talk and the uncertainties that accompanied it well for most of February. However, volatility presented itself as the month progressed to a close. 

The winter of tariff uncertainty could persist for a while longer — much like how Punxsutawney Phil saw his shadow. It is always darkest before dawn, and spring is right around the corner! We will see how it all plays out while remaining focused on the core principles of long-term investing.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Last week brought more sticky consumer inflation and a Fed message indicating a holding pattern on rate cuts, making it an opportune time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

Major U.S. stock market indexes rose for the week ending 02/14:

• The S&P 500 increased by 1.47%.
• The Nasdaq 100 traded higher by 2.90% (a weekly all-time closing high).
• The Dow Jones Industrial Average increased by 0.55%.

Hot January Inflation 

• Headline January Consumer Price Index (CPI) data showed a monthly increase of 0.5% for January (hotter than expectations of 0.3), equaling a 3.0% year-over-year inflation rate, up from 2.9% in December. 
• Markets initially reacted to the downside, with the data bolstering the case for the Fed to remain neutral for longer, but stock indexes recouped ground by the end of the week.
• Headline January Producer Price Index (PPI) data showed a rise of 0.4% on the month and a year-over-year increase of 3.5%, exceeding estimates of 0.3% and 3.2%, respectively. This data was also hot, with some encouraging data under the hood tied to the Fed’s preferred inflation gauge, Core Personal Consumption Expenditures (PCE).

Fed & Interest Rates

• In a two-day speech to Congress on monetary policy, Federal Reserve Chair Jerome Powell reiterated that the Fed is in no hurry to cut rates again anytime soon and will have to see more progress on inflation before doing so.
• On the heels of hotter-than-expected inflation data, markets pushed out rate cut probabilities to September, so on-the-fence homebuyers may have some food for thought. 
• However, in a week of up-and-down trading, the 10-year note yield ended slightly lower as mortgage rates reached two-month lows.

Divided Shopping Carts

• January retail sales data showed some post-holiday hangovers, with sales declining by 0.9% for the month versus Dow Jones estimates of a 0.2% decline.
• Some analysts call the larger-than-expected monthly decline “deceptive” and cite severe weather as a cause. 
• Many folks focused on the strong year-over-year increase, even though the data indicates the largest monthly drop in two years.

The Week Ahead

• Overall, this Presidents’ Day-shortened trading week will be light on economic data, but D.C. will most likely continue being active with policy change.
• In terms of the key releases, the focus will be on the January Fed meeting minutes to be released on Wednesday, flash manufacturing and services data on Thursday, and consumer sentiment data incoming on Friday. 
• Eyes will also be peeled on the revised consumer sentiment data after the preliminary reading showing weakness amid tariff concerns. Will the consumer shake off the post-holiday spending jitters and keep on buying? Maybe not eggs!

That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

Hope you enjoyed Super Bowl Sunday! Before the big game, markets digested news out of Washington at a frenzied pace last week, with tariffs being the talk of the town. Major U.S. equity indexes have healthily absorbed the data overall, given the sheer volume of the headlines. With so much happening in our world, here is a quick update.

Major Stock Indices

For the week ended 02/07/25, the large-cap S&P 500 fell by 0.24%, the Nasdaq 100 increased by 0.06%, and the Dow Jones Industrial Average decreased by 0.54%.

Choppy Equities

Major U.S. stock indexes had plenty to digest last week, given the rollout of tariffs as the week began. Then, we saw the subsequent rollback of some of them. Major U.S. stock indexes responded to the news flow by trading lower at the beginning of the week, clawing back some of those losses, and ending with a whimper on Friday. The result was a choppy or sideways trading week.

Overall, given the uncertainty of the tariffs, stocks stayed resilient last week. S&P 500 market volatility ended the week marginally higher and close to the flatline, just like major stock market indexes, indicating mostly overall investor calmness in a sea of changes last week.

Mixed January Jobs Data

The big economic data last week was nonfarm payrolls for January, which came in lower than expectations, showing 143,000 jobs created in January. This was below the 169,000 forecasted by Dow Jones.

The sluggish growth in payrolls during January could be partially attributed to the California wildfires and employers sitting on the fence awaiting more certainty on the new administration’s policies. Yet, December and November payrolls were revised higher.

Translation: While the headline number was a bit weak, much of the data under the hood was solid.

Markets received the data well early in the trading session last Friday but gave up the gains as the day wore on, with planned reciprocal tariffs, souring consumer sentiment (more on that in a minute), and inflationary concerns weighing on the minds of market participants.

Somewhat canceling out the softer-than-expected jobs number, the unemployment rate declined by a tick to 4.0%, and hourly wages grew. The full employment report is here.

10-Year Note Yields Fall

While tariffs are perceived as inflationary, 10-year note yields last week did not reflect this perception.

Last week, 10-year yields dropped by just over eight basis points, settling the week near 4.487%. Given that the yield was above 4.85% leading up to the inauguration, this is quite a dip, even as the headlines scream inflationary pressures.

Treasury Secretary Scott Bessent said that the president is more focused on keeping the 10-year yield low using fiscal policy than pushing for Fed rate cuts, as he did in his first term.

Earnings Growth

We are beyond the halfway point of Q4 earnings season. With 62% of S&P 500 companies having reported their Q4 results through 02/07, the blended year-over-year earnings growth rate for the S&P 500 is 16.4%.

Should this growth rate be realized, it would represent the highest year-over-year earnings growth recorded by the index since the fourth quarter of 2021, according to data from FactSet.

Consumer Sentiment Dips

Friday’s nonfarm payroll report was perhaps unusually overshadowed by University of Michigan Consumer Sentiment data last Friday, with a drop in the reading garnering plenty of attention.

The metric showed a dip to 67.8 versus expectations for a reading of 72.0, a decline from 71.1 in January’s reading. Perhaps this was not too much of a surprise given the nonstop tariff talk, but it is a big move nonetheless.

Year-ahead and long-run inflation expectations both surged from the consumer’s perspective, which led to a decline in market sentiment to end the week last week.

Could the consumer be overreacting to the tariff headlines?

Golden Age

Gold has continued to pile on the gains. Last week marked its sixth consecutive week of gains, driven by multiple factors. Some of these factors include continuing geopolitical tensions, robust physical demand, and a renewed outlook for inflation.

This Week: Powell, CPI

It’s time again for Consumer Price Index (CPI) data. This time, the impacts of potential tariffs will be weighed with the consumer inflation data for January. Early expectations are for an annual increase of 2.9% in the headline number, which would match monthly expectations of a 0.3% rise (depending on rounding). 

Core CPI (which excludes more volatile food and energy) will be watched closely this week. The last reading was 3.2% annualized (below expectations).

On top of the big CPI data release on Wednesday, Federal Reserve Chair Jerome Powell is speaking at the semi-annual Monetary Policy Report before the House Financial Services Committee.

Market watchers are anticipating Wednesday as a key day this week, followed by the release of the Producer Price Index (PPI) data on Thursday. Although, with tariff talks and more policy change likely coming out of Washington, it ought to be another action-packed week each day,

The Takeaway

Financial markets have performed well thus far in 2025 despite uncertainties. And while some individual stocks may swing in a more volatile fashion than others, the diversified portfolio can be the ticket to minimizing market volatility (and yes, that includes bonds!).

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.

It has been quite an eventful month to start 2025, with no shortage of market-moving news and developments. As such, now is the perfect time to offer a quick overview of key events. 

Month at a Glance

If the first month of the year is any indication of what 2025 will bring, we can expect resilience with some volatility sprinkled in across financial markets. 

The surface narrative for January was to “see what the president does,” and there was plenty of action via executive orders and policy changes for political junkies to analyze.

After the inauguration early in the month, attention quickly turned to economic data while the action from Washington continued to dominate headlines. Sprinkle in earnings season and a Fed meeting at the end of the month, and we had quite an eventful month.

Overall, for the month of January, the S&P 500 ($SPX) increased by 2.70%, the Nasdaq 100 ($NDX) rose by 2.22%, and the Dow Jones Industrial Average ($DJI) was higher by 4.70%.

Q4 Earnings Season

Let’s start with earnings since they are among the core fundamental drivers of equity pricing. Q4 earnings season is off to a promising start, and activity shifted into high gear in the last week of the month with some big tech showing their results.

During the final week of January, Meta, Microsoft, and Tesla all reported earnings after the bell on the same day, and all three stocks came into and out of the earnings results nearly unscathed on somewhat mixed results.

Stocks reacted positively and ended higher on the session with these results, as investors eagerly awaited results from Apple after the bell.

Apple did not disappoint. While sales of iPhones missed the mark, services revenue more than made up for it in Q4, and Chief Executive Officer (CEO) Tim Cook mentioned that sales were hotter in countries where Apple Intelligence is available, supporting the iPhone theme. Shares of Apple rose after the results.

Monthly Inflation Update

Producer Price Index (PPI): Producer Price Index (PPI) data showed that December prices rose by only 0.2%, lower than the 0.4% expected. This most recent data puts PPI at a 3.3% annual growth rate. We will take the small win!

Core PPI (which removes more volatile food and energy prices) stayed the same in December. This reading was below the expected 0.3% increase, which is also a positive sign. Core PPI now shows a year-over-year increase of 3.5%.

Central bankers watch Core PPI closely to assess price stability. This lower reading set a positive tone for the important Consumer Price Index (CPI) data that was released the next day.

Consumer Price Index (CPI): CPI data showed a monthly increase of 0.4%, slightly above what was expected. This results in a 2.9% inflation rate compared to last year, up from 2.7% in November. The increase was driven by higher prices for energy, food, vehicles, car insurance, and airfare.

While this might seem concerning, the overall data contained encouraging details that markets loved to see. Core CPI (excludes food and energy) increased by just 0.2%, below the expected 0.3%. It is now at a 3.2% annual rate, which the markets reacted positively to.

Another point of interest was shelter pricing. For December, shelter prices rose by 0.3% from the previous month and saw a 4.6% increase compared to last year. This gain is the smallest yearly gain since January 2022 — three years ago. Since housing prices are among the most stubborn in inflation trends, this news was a positive sign for the markets, and major U.S. stock market indexes rallied hard on the day of the data release.

Scorching Hot Payrolls

December payroll data (January data release) showed that 256,000 jobs were created for the month, significantly higher than the expected 155,000. Typically, this would indicate a robust U.S. job market and suggest that a recession is not on the horizon, which would please investors.

However, this time, the market response was less favorable. The strong economic data led to decreased expectations for a Federal Reserve rate cut at the January meeting, and unchanged rates is what we got.

In addition, the unemployment rate fell by one-tenth of a percentage point to 4.1%, down from the previously reported 4.2% in November.

Recent commentary coming out of the January Fed meeting included the labor market is “in balance,” despite the smoking hot payroll number we saw for December.

We get our next look at the labor market on Friday, February 7th, with 154,000 jobs expected to have been created in January.

January Fed Meeting 

During the final week of January, the Fed left rates unchanged as expected, keeping the federal funds rate at 4.25% – 4.50%.

The Fed statement included: “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” the new statement read.

The statement also indicated that “inflation remains somewhat elevated.” and that the economy “has continued to expand at a solid pace.”

Notably, the Fed removed any mention of “progress on inflation” from the statement. So, the Fed is taking a less confident view on inflation.

The Fed decision day resulted in many investors not being in the buying mood, as major U.S. stock indexes fell during the session.

Interest Rates

Fortunately, interest rates chilled out a bit in January post-inauguration. The white-hot rise pre-inauguration caught a breather and to end the month. The 10-year yield settled near 4.569%, just about unchanged for the month as a whole (lower by 4/10 of a single basis point). 

Investors seemed happy to take the other side of the pre-inauguration runup in rates by buying bonds after the event, taking 10-year yields from the near 4.80% level back down under 4.6%.

Bond vigilantes were the talk of the town during the runup in interest rates, and they have since been on the quiet side. Perhaps the emotionally charged fear of sharply higher rates under the new president was overdone, and investors found opportunity on the other side of the trade. Ah, fear and greed!

This leaves the average 30-year fixed mortgage rate near 7.05% on the last day of January according to Mortgage News Daily.

2-year yields ended January near 4.207%, down three and a half basis points on the month.

Deepseek AI Rattles Big Earnings Week

With markets already digesting plenty of change out of Washington and looking ahead to the biggest week of earnings in the final week of January, markets reacted to news of Deepseek before Monday’s market open.

The news of China’s Deepseek AI being produced for a fraction of the cost of OpenAI’s ChatGPT sent futures markets reeling overnight ahead of the opening bell for the final week of January.

Markets lost ground heavily that Monday, but many sectors recovered nicely for the most part as the week progressed via earnings and economic data. Chipmakers (notably NVIDIA) took a hit on the news.

Putting it Together

Yes, it has been a whirlwind of a month headline-wise — primarily via the transition of power in Washington — but looking at the monthly charts of major indexes, it just looks like a pedestrian bull market month.

That’s what is nice about charts and data; they remove emotions and noise.

What To Do?

So, here we are, in the present moment, with plenty of changes coming out of Washington as markets kick off the fresh year. So far, earnings season has been on the solid side, the labor market commentary from the Fed was constructive, and recent inflation data showed stickiness, resulting in pausing Fed navigating the unknown policies from the new administration.

As long-term investors, when the unknown or unexpected occurs (like Deepseek), these are the moments to remember the long-term plan. Volatility is always going to present itself in these markets, and it is crucial to remember the plan when volatility spikes.

Volatility Spikes?

On that note, volatility spikes in recent days and months have been mostly short-lived, and it seems that markets have gotten accustomed to that type of volatility digestion. That will not always be the case, and as investors we are mentally prepared for that. 

.

.

.

Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.