August 29, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 has marked its fourth consecutive month of gains, closing above the 6,500 mark for the first time on Thursday. The Dow rose by more than 3% in August, while the S&P 500 increased nearly 2% for the month. The Nasdaq, which is heavily focused on technology, advanced by 1.6% in August. Traders estimate that there is roughly an 87% chance the central bank will cut its benchmark interest rate by a quarter percentage point next month, according to CME Group data. Additionally, Factset reports that over 80% of S&P 500 companies have exceeded EPS estimates for Q3 thus far, which is above the five-year average of 72%. The forward 12-month P/E ratio for the S&P 500 is 16.6, which is lower than both the five-year average of 18.6 and the ten-year average of 16.9. The US government stated that GDP increased by 3.3% in the second quarter, a surprising rise from its initial estimate and a broad recovery from the 0.5% decline in Q1. The Commerce Department reported that prices rose by 2.6% in July compared to the same month last year. While inflation is considerably lower than the approximately 7% peak it reached three years ago, it remains significantly above the Federal Reserve’s 2% target.

August 22, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. For the week, the Dow experienced a gain of 1.5%, and the S&P 500 advanced by 0.3%, while the Nasdaq saw a decrease of 0.6%. In his speech at Jackson Hole, Fed Chair Powell indicated the possibility of a rate cut in September, stating, “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” On the topic of the labor market, Powell observed that the recent slowdown in hiring, combined with a deceleration in labor force growth, creates “a curious kind of balance that results from a marked slowing in both the supply of and demand for workers.” He remarked, “This unusual situation suggests that downside risks to employment are rising.” Powell cautioned that if these risks materialize, they could do so rapidly, resulting in sharply higher layoffs and an increase in unemployment. The July jobs report indicated that the US economy added 73,000 jobs last month, while revisions to the job gains in May and June eliminated approximately 250,000 job additions from the initial reports. Over the past three months, job gains have averaged a mere 35,000.

August 15, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Stocks showed gains on mixed economic news for the week: The S&P 500 was up by +0.9%, the Nasdaq increased by +0.8%, and the Dow rose by +1.7%. Retail sales climbed 0.5% in July, falling short of forecasts but marking the second consecutive monthly gain following a decline in spring. The number of Americans filing new applications for jobless benefits decreased last week amid low layoffs, with initial claims for state unemployment benefits falling by 3,000 to a seasonally adjusted total of 224,000 for the week ending August 9, as reported by the Labor Department on Thursday. Economists surveyed by Reuters had predicted 228,000 claims for the latest week. The Consumer Price Index (CPI) for July increased by 0.2%, matching consensus estimates and accelerating from June’s 0.1% gain, according to data from the Bureau of Labor Statistics. Although the core consumer price index (CPI) rose by 0.32% month-over-month, raising the year-over-year rate to 3.1%, tariffs are not the cause of inflation. Shelter accounted for approximately 32% of the monthly increase, followed by a three-year high in medical care services (driven by dental services) and a rise in transportation services (led by airfares); these three categories together made up over 70% of July’s core CPI increase. The largest tariff-related contributor—household furnishings and supplies—accounted for less than 10%. The Producer Price Index (PPI) for July indicated that inflation for businesses rose by 0.9% over the previous month, significantly ahead of the 0.2% increase that was forecast, according to data from the Bureau of Labor Statistics released on Thursday. On an annual basis, prices rose by 3.3%, the highest since February. Goldman Sachs warned that the ‘Goldilocks’ stock market may be impacted as the bank cautioned that “this calm could quickly turn into a storm if growth slows or the Fed tightens monetary policy.”

August 8, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major indexes experienced gains over the week, recovering from their most challenging week in several months, as investor apprehensions about tariffs and the state of the economy have eased. The Dow rose by 1.3% for the week, the S&P 500 increased by 2.4%, and the tech-heavy Nasdaq surged by 3.9%.  As the second quarter (Q2) earnings reached their peak weekly season, the S&P 500 is reporting impressive results. The percentage of S&P 500 companies that have reported positive earnings surprises, as well as the extent of these surprises, is above their 10-year averages. On a year-over-year basis, the S&P 500 is showing double-digit earnings growth for the third consecutive quarter, with companies reporting earnings that are 8.4% higher than estimates in total. Furthermore, the blended revenue growth rate for the second quarter so far is 6.3%, and 81% of S&P 500 companies have reported actual revenues exceeding estimates, surpassing the 5-year average of 70%. However, the U.S. economy grew at an average annual rate of merely 1.3% in the first half of 2025, compared to 3% in 2024.

August 1, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All key US indices ended the week lower amid concerns over tariffs, job growth, nuclear submarines, and the firing of the BLS chief responsible for employment data. For the trading week: S&P index -2.36%, Dow industrial average -2.92%, and Nasdaq index -2.17%. In July, the U.S. economy added a mere 73,000 jobs, significantly below the consensus estimate of 110,000. The unemployment rate rose to 4.2%, compared to 4.1% previously, suggesting a potential weakening in labor market conditions. Moreover, the Fed’s favored inflation metric, the core Personal Consumption Expenditures (PCE) Price Index, indicated that core inflation in the U.S. increased by 0.26% over June, largely driven by a notable rise in goods prices. The markets were also shaken by reports that the U.S. was deploying nuclear submarines in “appropriate regions” in response to provocative comments from former Russian President Medvedev.

July 25, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market has reached a new record high, driven by positive sentiment regarding trade negotiations between the U.S. and Europe. The Dow recorded a weekly increase of 1.3%, while the Nasdaq and S&P 500 saw rises of 1.2% and 1.6%, respectively. The S&P 500 achieved its fifth consecutive record closing high on Friday, and the Nasdaq Composite, which is heavily weighted towards technology, also reached a new all-time high. This week, Wall Street’s spirits were lifted by a trade agreement between the U.S. and Japan, which fostered optimism for further deals, while strong earnings from blue-chip and major tech companies marked a solid beginning to the earnings season. Investor optimism was also linked to the announcement that President Trump is set to meet with European Commission President Ursula von der Leyen on Sunday, raising hopes for a U.S.-EU agreement. Furthermore, deals were finalized with Japan, Indonesia, and the Philippines ahead of the impending August 1 tariff deadline. Investor sentiment has shifted, with 61% of retail investors expressing optimism about the markets, a rise of 12 percentage points from the last quarter, as reported by Morgan Stanley Wealth Management’s latest Retail Investor Pulse survey. This marks a turnaround from Q2, when bearish sentiment was in the majority.

July 18, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, investor attention returned to tariffs as U.S. trade discussions took center stage in the news. The S&P 500 concluded the week with a gain of +0.6%, the Nasdaq surged by +1.5%, while the Dow ended with a slight decline of -0.1%. Both the S&P 500 and Nasdaq have reached new record highs in recent weeks, as investors displayed growing uncertainty regarding Trump’s tariff threats, alongside a belief that these policies may not adversely affect the U.S. economy as severely as previously anticipated. The Trump administration was considering a minimum tariff ranging from 15% to 20% in any agreement with the European bloc, which initially caused markets to decline before they partially rebounded. Furthermore, this week also experienced a wave of inflation data releases from major economies for June, including the U.S., Canada, and the UK. Specifically, goods prices have reversed their previous trend of deflation and have risen across all three countries. However, both the CPI in Canada and the U.S. still aligned with their respective central bank targets, despite the rising goods prices. Despite the rally in risk assets last week, the relationship between the dollar and Treasury yields has completely unraveled. Traditionally, these two have moved in sync; however, we are currently witnessing yields rise while the dollar falls to multi-year lows.

July 11, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Although major stock indexes reached record highs this week, they ultimately posted losses for the week due to renewed concerns regarding the future of trade policy and its potential implications for the U.S. economy. The Dow Jones experienced a sharp 1% decline this week, while the S&P 500 and Nasdaq saw decreases of 0.3% and 0.1%, respectively. A team led by David Kostin, Goldman’s chief U.S. equity strategist, now expects the S&P 500 to achieve 6,900 in the next 12 months, an increase from the previous forecast of 6,500. In the next three months, they anticipate a 3% gain, bringing it to 6,400 (up from 5,900), and over six months, a 6% gain to 6,600 (up from 6,100). “A positive outlook for earnings growth in 2026, the resumption of Federal Reserve rate cuts, and neutral investor positioning indicate potential for further market gains as the recent narrow rally expands,” stated Kostin and his team. However, it is noteworthy that the median index constituent remains over 10% below its 52-week high, resulting in one of the narrowest market breadth readings in recent decades. Once again, Goldman expresses optimism: “While narrow breadth often signals the risk of larger-than-average drawdowns, we believe a ‘catch-up’ is more likely than a ‘catch-down’ and expect the market rally to broaden in the next few months.” Goldman projects that S&P 500 earnings per share (EPS) will increase by 7% in both 2025 and 2026.

July 3, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Stocks finished the week at all-time highs after positive job reports, as the tech sector stocks maintain their upward momentum. The S&P 500 rose by 1.72%, the Dow jumped by 2.3%, and the Nasdaq grew by 1.62%. In June, nonfarm payrolls increased by 147,000, exceeding economists’ expectations of a 110,000 rise and slightly ahead of May’s upwardly adjusted figure of 144,000 (previously 139,000), according to new statistics from the U.S. Bureau of Labor Statistics. The unemployment rate decreased to 4.1%, falling below the consensus of 4.3% and May’s 4.2% figure. Despite the S&P 500 reaching new heights, the rally remains top-heavy. The Magnificent Seven continue to account for a significant portion of the index’s returns, making up over 40% of the gains since April.

June 27, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 wrapped up the week approaching its former record high, as optimism grew from trade negotiations and the likelihood of a Federal Reserve rate cut. Furthermore, stocks advanced as markets reacted positively to encouraging news after several days marked by Middle Eastern tensions and fluctuating tariff concerns. The S&P 500 has gained more than 20% since it reached a low point on April 8 and is now nearly 5% up for the year. During this time, investors have continued to buy, even in the face of rising oil prices caused by the Israel-Iran conflict and a spike in yields linked to deficit anxieties. The latest figures from the Federal Reserve’s favored inflation indicator revealed that price increases quickened in May, with inflation staying above the Fed’s 2% target. Jerome Powell, the Chair of the Federal Reserve, has pointed out that rising price pressures could pose a challenge to implementing a rate cut.

June 20, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. With investors feeling uneasy about the Iran-Israel conflict as the weekend approaches, and with the U.S. deliberating its potential involvement, the stock market ended the week with mixed results: The Dow was relatively unchanged, the S&P 500 decreased by 0.2%, and the Nasdaq increased by 0.2%. However, historical data from past geopolitical shocks since 1939 suggests that the median market loss from such events is only -5.6%, typically lasting just 16 days. Furthermore, markets usually rebound quickly, with sixty percent of the time, the S&P 500 Index has recovered losses within a month of reaching its lowest point. The Federal Reserve has kept its key borrowing rate targeted in a range of 4.25%-4.5%, where it has remained since December. However, the central bank anticipates that inflation will continue to be elevated and predicts lower economic growth ahead. Nevertheless, the Federal Open Market Committee is expected to implement two rate reductions later this year, according to the closely monitored “dot plot.” The FOMC statement has changed little since the May meeting. Broadly speaking, the economy has been growing at a “solid pace,” with “low” unemployment and “somewhat elevated” inflation, as stated by the committee. Moreover, the committee has indicated less concern regarding the fluctuations in the economy and the uncertainties surrounding White House trade policy.

May 30, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 marked the best month of May in 30 years driven by Wall Street’s optimism regarding tariff relief, with a notable increase of 6.2%, the highest since November 2023. The Dow added 3.9% over the month, while the Nasdaq experienced a significant rise of 9.6%. May began with a tumultuous start for stocks, as President Trump’s unpredictable trade policies kept investors on high alert. However, his softened stance on tariffs, coupled with positive earnings and moderate inflation data, enabled the S&P 500 to bounce back from its lows in April. May’s recovery has allowed the equity index benchmarks to recoup a majority of their losses for the year. However, they still remain approximately 4% to 6% below their all-time closing highs.

May 23, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The Dow Jones, S&P 500, and Nasdaq all finished the week in the red, influenced by reports of President Trump’s revived tariff threats and growing anxiety over the US deficit. For the week, the Dow declined by 2.47%, the S&P 500 decreased by 2.61%, and the Nasdaq lost 2.48%. President Trump issued threats of tariffs against the European Union and the iPhone manufacturer Apple. He indicated a potential increase in tariffs on EU imports to ‘a straight 50%’ starting June 1, as trade negotiations reached an impasse, and specifically targeted Apple with a 50% tariff on iPhones not produced in the United States. Treasury Secretary Scott Bessent remarked that Trump did not find the EU’s trade proposals to be of adequate quality. A deficit-increasing bill was approved by the U.S. House this week, even in light of another reduction in the U.S. government’s credit rating. Concerned investors pointed to increasing Treasury yields as an indication that fiscal challenges are impacting the bond market. In fact, 30-year Treasury yields surpassed 5% this week, marking the highest level since 2006.

May 16, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. For the week, the S&P 500 recorded a gain of around 5.3%, while the Nasdaq increased by 7.2% and the Dow rose by 3.4%, as Wall Street welcomed encouraging trade agreements, positive earnings, and a favorable Consumer Price Index (CPI). This week saw the announcement of trade agreements with China and various Middle Eastern nations, and the Bureau of Labor Statistics indicated that the consumer price index increased by 0.2% in April, compared to an expected rise of 0.3%, which lowered the annual inflation rate from 2.4% to 2.3%. The S&P 500 is reporting a year-over-year earnings growth of 13.4% for the first quarter, exceeding the previous estimate of 7.1%. Additionally, JPMorgan Chase & Co. has raised its forecast for US economic growth following a temporary trade agreement between the US and China, abandoning its earlier prediction that the largest economy in the world would enter a recession by 2025.

May 9, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After consecutive weekly gains, U.S. stocks experienced a general decline this week as investors faced uncertainty regarding Federal Reserve policies and ongoing global trade negotiations. The S&P 500 fell by 0.5% over the week, while the Dow Jones decreased by 0.2%, and the Nasdaq Composite also ended the week lower with a 0.3% drop. On Wednesday, the Federal Reserve decided to maintain its key interest rate as it awaits the development of the Trump administration’s trade policies and their effects on a struggling economy. In a decision that was largely anticipated given the prevailing uncertainty in the political and economic environment, the FOMC kept its benchmark overnight borrowing rate steady at a range of 4.25%-4.5%, unchanged since December. The Fed remarked, ‘Uncertainty regarding the economic outlook has further increased’ and ‘The Committee is mindful of the risks associated with both aspects of its dual mandate and assesses that the risks of rising unemployment and inflation have escalated.’ During its previous meeting in March 2025, the Fed maintained the key benchmark lending rate at 4.25% to 4.50%, while indicating the potential for two cuts of 25 basis points before the year’s end.

May 2, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In the wake of a steep decline during the first week of April, the S&P 500 mounted a vigorous recovery, driven by news of a 90-day pause in the implementation of tariffs. By the close of the weekend on May 2, 2025, the S&P 500 had achieved a 2.9% return, marking its ninth consecutive day of gains, the longest such streak since 2004. However, the S&P 500 still finished the month down 0.7%, with 10 of the 17 factor indices we monitor underperforming relative to the U.S. benchmark. Pure Growth was the best performer among these indices, rising by 2.6%, while High Dividend lagged with a decline of 5.6%. Additionally, this week, we learned that the U.S. GDP contracted at an annualized quarterly rate of -0.3%, ending a 10-quarter period of strong economic growth. Nonetheless, this appears to be more of a temporary fluctuation than a lasting trend. A detailed review of the report indicates that a significant increase in imports, as U.S. firms anticipated tariffs, detracted five percentage points from growth.

April 25, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The three major stock market indices experienced an increase over the week, marking their second week of gains out of the last three. The S&P 500 rose by 4.6%, while the Nasdaq saw a rise of 6.7%. Although the Dow lagged behind, it still achieved a weekly gain of 2.5%. Throughout the week, market fluctuations were influenced by news regarding tariff regulations, the autonomy of the Federal Reserve, and trade discussions between the U.S. and China. The inconsistent communication surrounding trade issues has contributed to market volatility. Earnings for the S&P 500 are projected to have increased by 9.7% in the first quarter compared to the previous year, with 64% of S&P companies surpassing revenue forecasts for Q1, aligning with the 10-year average of 64%. Investors will be closely monitoring several key economic indicators set to be released next week, including quarterly GDP figures, a significant inflation report, and the employment statistics for April.

April 17, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, market fluctuations persisted as investors grappled with the potential effects of tariffs. The S&P 500 experienced a decline of 1.5%, while the Dow and Nasdaq fell by 2.7% and 2.6%, respectively. In 2025, the Dow and S&P 500 have decreased by 8% and 10%, respectively, with the Nasdaq suffering a nearly 16% loss. Fed Chair Jerome Powell indicated that the tariffs imposed by the Trump administration would likely increase inflation and hinder economic growth, presenting a challenge for the central bank in determining interest rate policy. Analysts at Wedbush informed clients in a note on Thursday that they anticipate minimal guidance from technology companies over the next month due to the current uncertain environment. Additionally, tariffs have adversely affected U.S. consumer sentiment, which has fallen to its second-lowest level since records began in 1952. According to the latest survey from the University of Michigan, consumer sentiment dropped 11% this month to a preliminary reading of 50.8, marking the second-lowest figure recorded since 1952 and lower than any reading during the Great Recession.

April 11, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. It was a wild ride, but all three major U.S. indexes ended the week higher after Trump paused some Tariff actions and the Boston Federal Reserve President Susan Collins made assurances that the Fed is prepared to keep financial markets functioning should the need arise: S&P 500 +1.81%, Nasdaq +1.63% & Dow +1.56%. However, the S&P 500 and Nasdaq are still down -8.8% and -13.4% for the year, respectfully. Morgan Stanley’s base case is a soft landing characterized as “slower but steady growth and inflation” that stays relatively subdued, while Goldman Sachs lowered their odds for a recession in the year ahead to 45%, unwinding an increase to 65% earlier in the day prior.

S&P 500 lost $5 trillion in two days in tariff selloff, exceeding a two-day loss of $3.3 trillion in March 2020 when the pandemic ripped across global markets. The S&P 500 fell 10.5% across Thursday and Friday, the index’s worst 2-day stretch since March 2020 and its third worst since the turn of the century. Similarly, the Nasdaq plunged 11.4% and the Dow 9.3% marking their worst 2-day stretch since March 2020.

Insofar as tariffs were expected to be announced by the Trump Administration, the breadth and severity of the levies dwarfed those imposed by Trump during his first term, threatening to upend global supply chains, exacerbate an economic slowdown and boost inflation. The proposed increases, which encompass tariffs on automobiles and other previously disclosed items, are projected to elevate the average US tariff rate to over 20%, marking the highest level in more than a century. Wall Street economists pronounced the tariff outcome as worse than expected. Since the tariff hike was more severe and harsh than what most market participants anticipated, the equity market responded with sharp risk off sentiment. This reflects weaker economic expectations on a macro level as well as the individually impacted company stocks on a micro level.

Business confidence measures have fallen and those for consumers have outright plunged, impacted by uncertainty and expectations for higher inflation. The exorbitantly high tariffs will also likely alter corporate capital expenditures, employment hiring and retention, investment and obviously restrict freedom of trade. While the economic impact of these potential changes for the U.S. economy is expected to be moderate over time, market volatility is likely to remain elevated—and the situation remains fluid.

A key concern is that tariff uncertainty continues with retaliatory tariffs from the EU, UK, Asia and other regions expected to unfold in the coming days. Therefore, early Thursday we forecasted 5,300 as the near-term drop target for the S&P 500 but also stated that should tariff risks persist with trading partners we see the next downside leg to be 5,000. Should global “tit-for-tat” retaliatory tariffs escalate, then the probability of US stocks entering bear market will go higher.

In the bond market, US Treasury yields fell sharply. Investors turn to US government bonds as a safe haven, as well as on expectations of a slowdown in economic growth. The yield on the key 10-year US Treasury note fell to 4.01% from 4.20% before Trump unveiled his plans.

Since we emphasize that the understanding of risks embedded in a portfolio is central to providing value to our clients, we actively manage and build diverse, multi-asset portfolios to capture long-term positive returns while having resilient portfolios that may help weather market volatility. This risk management reflects the concepts of having strategy and asset-class diversification in place, risk management and good defensive planning.

What also sets us apart from our advisory peers is the implementation of several liquid alternative funds in portfolios, which add stability during times of negative volatility, while also offering participation in upward trending (or recovering) markets.  Additionally, we have a good degree of gold, gold miners and investment grade bonds that add another layer of insulation. Finally, portfolios have equity loss buffer ETFs that are in place given our expectation of market volatility in 2025.

Therefore, we think our portfolios have the right assets in place to help mitigate losses while positioning client portfolios for the eventual market recovery, whenever that might take place. Finally, I respectfully reiterate some of our most relevant predictions from our 2025 Capital Market Report, released back on January 2, 2025.

• “However, given there is a political regime change, we anticipate larger deficits, more tariffs, geopolitical tensions, a complicated energy transition, and persistent inflation in the economy.”
• “We anticipate a market correction (-10%) at some point during the year, albeit brief in duration.”
• “Our client portfolios are strategically designed to include substantial exposure to alternative strategies via liquid, tradable mutual funds. The allocation to these investments is adjusted tactically throughout the year, underscoring their value in providing independent, absolute returns with diminished correlation to market fluctuations.”
• “In light of elevated prevailing valuations and policy uncertainties…”
• “Our client portfolios are distinguished by a considerable diversity of asset classes, each contributing unique return and risk attributes, with the overarching aim of enhancing portfolio return stability and curtailing volatility.”

April 1, 2025, Monthly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and the Nasdaq Composite recorded their worst quarterly results since 2022 on Monday, as the uncertainty surrounding the economic agenda of the Trump administration disrupted U.S. equity markets in the first quarter of 2025. The S&P 500 declined by 4.6% for the quarter, while the Nasdaq Composite dropped by 10.5%. The Dow Jones Industrial Average also fell, decreasing by 1.3% during the first three months. In March, both broad equity market indices and technology benchmarks experienced significant downturns, with their largest monthly percentage losses since December 2022, as President Donald Trump introduced a series of new tariffs, raising concerns about a potential global trade war that could adversely affect economic growth and lead to inflation.

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). 

February 21, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Stocks experienced a reversal of their weekly gains on Friday as investors became more cautious in response to signs of an underperforming economy. The Dow and Nasdaq fell by 2.5%, while the S&P 500 Index saw a decrease of 1.7% for the week. The University of Michigan reported that consumer sentiment in February dropped to 64.7 from 67.8 earlier in the month, reaching its lowest level since November 2023. This decline represents nearly a 10% decrease from January. Further compounding worries were indicators of weaknesses in the service industry, with declining retail sales, and a 4.9% decline in existing home sales last month.

February 14, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, the Nasdaq distinguished itself with a notable increase of 2.5%, securing the title for the largest gain, while the S&P 500 index experienced a rise of 1.6% over the past five days. The Dow Jones also saw a modest increase of 0.7%. A stronger-than-anticipated inflation report has led investors to reassess their expectations regarding interest rate reductions in 2025. The Consumer Price Index (CPI) for January, released on Wednesday, indicated that overall consumer prices rose more than expected, with core prices reversing the previous month’s decline. On a core basis, which excludes the more volatile food and energy prices, January saw a 0.4% increase compared to the previous month, surpassing December’s growth. Federal Reserve Chair Jerome Powell emphasized a cautious approach to interest rates during his testimony before the Senate Banking Committee, stating, “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.” Additionally, U.S. producer prices showed a solid increase in January, reinforcing the notion that inflation is on the rise and bolstering market expectations that the Federal Reserve will refrain from cutting interest rates before the latter half of the year. According to the Labor Department’s Bureau of Labor Statistics (BLS), the producer price index for final demand rose by 0.4% last month, following an upwardly revised 0.5% increase in December, while economists had anticipated a 0.3% rise. Furthermore, retail sales experienced their most significant decline of the year, dropping by 0.9% in January, exceeding the expected 0.2% decrease, marking the largest month-over-month drop in retail sales since January 2024.

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%.