March 28, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. As reciprocal tariffs loom, the Dow Jones, S&P 500, and Nasdaq recorded their worst performance in nearly three weeks, driven by inflation and consumer sentiment reports. This resulted in a weekly decline for stocks, further deepening March's losses. The S&P 500 fell by 1.53% this week, while the Dow, which consists of 30 stocks, decreased by 0.96%. The Nasdaq experienced a more substantial decline of 2.59%. Consequently, the Nasdaq is now projected to face a monthly drop of over 8%, which would represent its most significant monthly decline since December 2022. Furthermore, the Conference Board's consumer confidence survey for March hit its lowest level since 2021. The recent drop in consumer confidence, following a series of weak survey indicators, has intensified worries that U.S. consumers may cut back on their spending.
March 21, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500, representing the broad market, recorded a weekly gain of 0.5%, thus avoiding a fifth consecutive week of losses. Similarly, the Nasdaq increased by 0.2% for the week, while the Dow Jones rose 1.2%. The trading session was marked by volatility, with major indices recovering from their earlier lows following President Trump's announcement of potential "flexibility" regarding tariffs. Nevertheless, Trump reiterated that the tariffs set to take effect on April 2 will be reciprocal, indicating that all nations imposing tariffs on U.S. products will face similar charges. The Federal Reserve maintained its interest rates within the target range of 4.25% to 4.5%, although officials projected two rate cuts in 2025. Their economic forecast also anticipated rising inflation and a slowdown in economic growth. During his press conference, Fed Chair Jerome Powell noted that a significant portion of the central bank's heightened inflation expectations is attributed to tariffs. According to the March Summary of Economic Projections (SEP), the median policymaker foresees "no further improvement in core inflation," now estimated at 2.8%, up from the earlier figure of 2.5%, largely attributed to risks associated with tariffs.
March 14, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. S&P 500 ends Friday with the biggest daily gain since November as Big Tech stocks benefited from a recovery rally. But it was a rough week for U.S. equities amid tariffs and government shutdown worries with the Dow down 3.1%, the S&P 500 off 2.3% and the technology-heavy Nasdaq finishing with a 2.4% loss. As of the market's close on Thursday, the S&P 500 Index had declined by 10.1% from its peak, thus entering a "correction" phase, which is characterized by a drop of 10% to 20% from previous highs. It is important to note that corrections are not uncommon and do not necessarily indicate an impending recession. Since 1990, there have been twelve instances of corrections in the S&P 500 that did not lead to a recession. This suggests that, should a recession be averted, equities typically stabilize and recover their previous levels within a year. The average recovery period spans 145 trading days, although some have been as brief as 80 days. Despite numerous negative news reports, we remain optimistic about the potential for growth in the U.S. economy. The February jobs report from last week indicates that U.S. consumers are experiencing genuine income growth, with total nominal consumer income rising by 5% year-over-year, surpassing the long-term average of 3.6% and outpacing inflation.
March 7, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market faced its most challenging week in several months, with the S&P 500 declining by 3.1%, the Nasdaq dropping by 3.45%, and the Dow falling by 2.37%. The Nasdaq is now over 10% below its December peak, officially entering correction territory. This recent market upheaval is thought to be a factor in the US president's decision to delay certain tariffs on Canadian and Mexican products until April 2. Investors reacted to the weekly jobless claims data released on Thursday, which indicated 221,000 initial claims, a decrease from the previous week and below economists' expectations. A series of disappointing economic indicators has raised concerns regarding a potential slowdown in US economic growth, reviving fears of stagflation.
February 28, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The Nasdaq tumbled 3.5% and the S&P 500 fell nearly 1% for the week after concerns over slowing economic growth, President Donald Trump's tariff plans and rising geopolitical risks put Wall Street on edge. Trump wrote in a post on Truth Social that the proposed 25% tariffs on Canada and China would take effect on March 4 after a month-long halt as he believes that both countries failed to take adequate steps to curb the flow of drugs over the border. Investors are also concerned about rising inflation, which has faded hopes of a rate cut by the Federal Reserve anytime soon. Moreover, U.S. economic growth slowed in the fourth quarter with Gross domestic product showing an increase of only 2.3% annualized rate last quarter after accelerating at a 3.1% pace in the July-September quarter, according to the Commerce Department's Bureau of Economic Analysis (BEA).
