February 7, 2025, Weekly Stock Market Return Recap, by Kipley Lytel CFA, Montecito Capital Management. The week ended with all three major U.S. stock indices closing lower, following a series of erratic trading sessions driven by tariff-related trade uncertainties and notable earnings from major technology firms. The principal indices finished in the negative, with the Dow Jones and Nasdaq each declining by 0.5%, while the S&P 500 saw a slight reduction of 0.2%. The Labor Department's employment report released on Friday morning revealed that job growth in January was less than what economists had anticipated, although the unemployment rate surprisingly fell to 4.0%. The monthly jobs report is a critical indicator that the Federal Reserve uses in its interest rate deliberations, making it an essential data point for investors. Additionally, the 2-year treasury rate increased by 7.1 basis points, closing at 4.28%, the highest closing figure since January 23rd.
January 31, 2025, Weekly Stock Market Return Recap, by Kipley Lytel CFA, Montecito Capital Management. On the week, the S&P 500 experienced a decline of 1%, while the Nasdaq, which is heavily weighted towards technology, saw a more significant drop of 1.6%. In contrast, the Dow Jones Industrial Average recorded a slight increase of 0.3%. On Monday, global investors responded by offloading technology shares, fearing that the launch of an affordable Chinese artificial intelligence model could threaten the dominance of leading AI companies like Nvidia (NVDA). This resulted in a remarkable loss of $593 billion in Nvidia's market capitalization, marking the largest single-day drop for any firm on Wall Street. In a widely expected move, the Federal Reserve decided to hold interest rates steady after three consecutive cuts, marking the first pause since July 2024. The Federal Open Market Committee reached a unanimous consensus to maintain the target federal funds rate within the range of 4.25% to 4.5%. Policymakers reiterated their dedication to assessing "the extent and timing" of any future rate changes based on evolving data and forecasts. They also noted that the unemployment rate has "stabilized at a low level in recent months," in contrast to earlier descriptions of it having "eased," and confirmed that job market conditions remain "solid." The U.S. economy recorded slower-than-expected growth in the fourth quarter, with the Bureau of Economic Analysis's preliminary estimate showing an annualized growth rate of 2.3%, which is below the 2.6% growth anticipated by economists surveyed by Bloomberg. The Personal Consumption Expenditures Price Index experienced a rise of 0.3% in December, marking the most significant increase since April of the previous year, following an unchanged gain of 0.1% in November, as reported by the Bureau of Economic Analysis within the Commerce Department. Year-on-year, PCE inflation has increased by 2.6%.
