Financial Market Update – Week of 05/12

Last week brought trade framework progress between the U.S. and the U.K. and a Federal Reserve that seemed a bit uncertain during its policy meeting. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

For the week ending May 9th, major U.S. stock market indexes were marginally lower, with smaller trading ranges and lower volatility than we have seen in recent weeks.

• The S&P 500 decreased by 0.47%.
• The Dow Jones Industrial Average decreased by 0.16%.
• The Nasdaq 100 finished the week lower by 0.20%.

U.S-U.K.Trade Deal 

• While last week started sluggishly for stocks on Monday and Tuesday, news broke on Wednesday of a trade deal on the horizon between the U.S. and the U.K. Markets liked the sound of that, and investor sentiment picked up heading into Thursday’s meeting in the Oval Office between President Donald Trump and  Peter Mandelson, the U.K. ambassador to the U.S.
• Broad outlines of the deal were unveiled at the gathering, while full agreement details were not readily available. It seems that the U.S. duties on steel from the U.K. will drop to zero from 25%. 
• The agreement seems to set an early “baseline” on tariffs at 10%.

Energy Down, Bitcoin Up

• Positive developments on trade aside, gas prices have surely headed lower recently here at home. With the price of crude oil reaching four-year lows last week, drivers should save a few bucks heading into the peak driving season this year.
• The national average for gasoline in the U.S. was $3.135 per gallon (regular) as of 5/11/25, according to data from AAA. One year ago, the national average price per gallon was $3.625 — good news for drivers approaching the Memorial Day holiday.
• Cryptocurrency prices rose after the trade agreement last week, with the largest cryptocurrency by market cap, Bitcoin, rising to over $100,000 per coin. The recent all-time high was back in January of this year near $109,000.

Uncertain Fed?

• As expected, the Fed left its key overnight lending rate unchanged at 4.25%-4.50% at its May meeting last week. 
• An uncertain tone was struck given some recent economic developments featuring economic strength, and others showing weakness. The Fed ruled out any preemptive rate cuts relating to tariffs.
• Federal Reserve Chair Jerome Powell reiterated the Fed’s “wait and see” mentality and made some other notable comments regarding the state of the economy.

The Week Ahead = CPI & More

• After last week’s quiet stock index trading ranges and little in the way of economic news, this week is a bit different! 
• We get Consumer Price Index data on Tuesday. On Thursday, we will get Producer Price Index data, retail sales data, and Powell speaking at an event. And consumer sentiment data will be released on Friday.

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. 

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Last month brought volatile markets early in April, yet it also presented moderating inflation metrics and a strong finish for large-cap technology stocks. With all of these developments in mind, now feels like a good 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

April was a remarkably volatile month on Wall Street, courtesy of tariff talk and uncertainty. However, major U.S. stock indexes finished the month well off their lowest levels seen during the early part of the month.

Here’s how major U.S. stock indexes fared in April:

• The S&P 500 declined by 0.76%.
• The Nasdaq 100 rose by 1.52%.
• The Dow Jones Industrial Average decreased by 3.17%.

A Month of Tariff Uncertainty & Volatility

The ongoing tariff talk has been a rollercoaster ride of volatility. Here is the tariff-talk roundup:

• Starting out the month of April, additional imposed and imminent retaliatory tariffs sent major U.S. stock market averages sharply lower, experiencing their worst week since 2020.
• At the close of the first trading week of the month, the Dow landed in correction territory, and the Nasdaq Composite landed in bear market territory (a 20% or greater decline from a recent high).
• But hold the phone. As the month progressed into the second week, we not only got some unprecedented volatility, but we also got some tariff relief.
• The tone on tariff uncertainty seemed to be one of less concern towards the end of the month, as investors looked for more progress on tariffs.

Inflation Moderation

Inflation metrics showed more signs of moderating in April – a welcome sign during a period of market turbulence.

Consumer Price Index (CPI)

• The Consumer Price Index (CPI) for March (April data release) reported an annual inflation rate of 2.4%. This reading represents a decline of 0.1% from the previous month and a decrease from 2.8% in February, reaching a six-month low. This data was two ticks lower than Dow Jones estimates, which predicted an inflation rate of 2.6%.
• Additionally, Core CPI, which excludes food and energy prices, reached a four-year low in March. This development is quite encouraging news for the economy, especially given the lingering concerns about inflation related to tariffs.

Producer Price Index & Core PCE

• The March Producer Price Index (PPI) dropped unexpectedly in March, with the wholesale pricing metric showing a 0.4% drop, supportive of an easing inflation narrative.
• Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, was released towards the end of the month, so it is the freshest piece of inflation data. Data showed that Core PCE softened to 2.6% in March, matching consensus estimates and reaching a multi-year low.

Putting together the inflation metrics released in April, one could surmise a cooling narrative, while the future impact of tariffs is yet to be known.

Q1 Earnings Season

• As May begins, we have the meat of earnings season underway.  
• At the time of writing, several Magnificent 7 earnings reports are yet to be announced.
• However, we did get stronger than expected Q1 revenue from Meta, and strong results from Microsoft.

Fed & Treasuries

There was no Fed meeting in April, but the next meeting is right around the corner on May 7th-8th. Meeting minutes from the last Fed meeting were released in April, however.

• 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.
• At the close of the last trading day of April, Fed Funds futures markets are pricing a high probability (91.6%) that the Fed will leave rates unchanged at the May meeting.
• Looking ahead to the June Fed meeting, probabilities show a mixed picture, with a 59.6% chance of a quarter-point cut by the Fed, as of the market close on April 30th.
• The U.S. 10-year note yield finished April around 6.9 basis points lower than March’s monthly closing level, settling near 4.177%.

GDP Contraction

• The U.S. economy shrank at a 0.3% annualized rate in the first quarter of 2025, based on Gross Domestic Product (GDP) data, as policy uncertainty weighed on the minds of Americans.
• Imports for the first quarter soared ahead of tariffs, affecting GDP data to the downside.
• The Q1 GDP data print was a tick worse than estimates by Bloomberg economists for a contraction of 0.2% and was the first quarter of negative GDP growth since Q1 2022.

Labor Market: April Data Release 

• Amidst last month’s high stock market volatility, payroll data was strong, with 228,000 jobs created in March, exceeding expectations of 140,000. The unemployment rate rose slightly to 4.2%.
• The healthcare sector led job creation in March, and average hourly earnings increased by 0.3% in March. Although strong labor market data typically garners market attention, the report released at the beginning of April coincided with tariff turbulence.

Labor Market: May Data Release

• The freshest labor/payroll data release showed a seasonally adjusted 177,000 jobs created in April, surpassing the Dow Jones estimate of 133K.
• The job number was stronger than expected, even with concerns over the recently imposed blanket tariffs.
• Equity market reaction was positive to the data. The unemployment rate remained steady at 4.2%, indicating relative labor market stability, while average hourly earnings rose by just 0.2% for the month, shy of the 0.3% estimate.

The Consumer: Retail Sales vs. Sentiment

• Data from the University of Michigan indicated that consumer sentiment dropped to one of its lowest levels recorded in April, marking the fourth consecutive month of decline. However, the reading of 52.2 was better than the expected 50.8.
• In March, retail sales skyrocketed, with analysts comparing it to a “gigantic clearance sale” due to expectations of rising prices in the coming year. Consumers rushed to buy items, particularly in the motor vehicle sector. This resulted in a 1.4% sales increase that exceeded the Dow Jones’ 1.2% forecast and was a significant rise from February’s 0.2% rise.

May Flowers?

Spring sprung with a wild month of April for the financial markets. By the end of April, as attention turned to the May 8th Fed meeting and earnings, the broader tone had at least somewhat shifted away from extreme pessimistic sentiment. 

Tariff and policy uncertainty is alive and well, but earnings are at the front of the market’s collective minds at the time of writing. All the while, the markets are digesting the contracting GDP data released on the last day of April.

While nobody can know what is ahead, April was a testament to the importance of staying calm and collected during periods of market volatility for the long-term investor. As markets experienced high volatility and doubt during April, the close of the month looked much better than the beginning.

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Last week brought strength in technology stocks via earnings and some tariff rhetoric relaxation, 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 indexes bounced back last week, with strong tech earnings setting the tone after a volatile start to the week last Monday.

• The S&P 500 rose by 4.59%. 
• The Dow Jones Industrial Average increased by 2.48%.
• The Nasdaq 100 soared by 6.43%. 

Tech Strength & Earnings

• Tech led the way last week with solid earnings results from Alphabet (Google).
• According to data from Factset released on April 25th, with 36% of S&P 500 companies reporting results so far, 73% showed a positive earnings per share surprise, and 64% reported a positive revenue surprise.
• So far, the blended year-over-year earnings growth rate for Q1 2025 is 10.1%. If 10.1% ends up as the final number once all S&P 500 companies report Q1 earnings, it will mark the second consecutive quarter of double-digit growth for the index.

Easing Tariff Rhetoric

• Tariff talk was on the softer side last week, standing as a partial catalyst for market sentiment rising. 
• Last Friday, reports emerged that China quietly rolled back tariffs on U.S. semiconductors, easing pressure in the tech sector as tech stocks rallied.

Consumer Sentiment Sours Further

• Data compiled by the University of Michigan showed consumer sentiment diving in April to one of the lowest numbers on record, making it four months in a row for souring consumer sentiment
• While that might sound concerning, the number was better than expected, with the reading showing 52.2 versus the 50.8 forecasted.

The Week Ahead

• Earnings season is in full swing, and it’s earnings week for the “Magnificent 7.” We will get results from Microsoft. Amazon, Meta, and Apple — so it’s the biggest week of the earnings season.
• In addition, there are plenty of economic data releases: quarterly Gross Domestic Product (GDP) data, the Fed’s favorite inflation indicator in the form of Core Personal Consumption Expenditures (PCE), and the monthly employment numbers on Friday.

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 as the week unfolds, don’t hesitate to reach out.

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

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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.

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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.

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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.

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Did Something in This Update Spark Your Interest?

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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.

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Did Something in This Update Spark Your Interest?

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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.