Markets had little appetite for riskier asset classes this week. Will a more cautious approach win out in the foreseeable future?
Monday
S&P 500 -0.50% | NASDAQ -01.21%
Markets decided to start right where they left off last week. There was little hope for a rebound as technology stocks took the brunt of the sell-off.
Tuesday
S&P 500 -0.47% | NASDAQ -1.35%
Much of the same on Tuesday as the sell-off continued. Consumer confidence contracted further in February, falling below levels seen before the market pulled back in October 2024.
Wednesday
S&P 500 0.01% | NASDAQ 0.26%
Markets were able to hold on for the day and finished in the positive. The move to safety was noted in the 10-year treasury which fell to 4.25% (or down 30 basis points) in less than a week. New Home sales slid in January.
Thursday
S&P 500 -1.59% | NASDAQ -2.78%
Equity markets continued to sell due to the threat of tariffs taking effect at the beginning of March. The selling intensified through the close as the 30-day pause of tariffs on major imports was expected to be lifted following comments by the President.
Friday
S&P 500 1.59% | NASDAQ 1.63%
Markets rebounded some on Friday even with the bleak outlook for GDP in the first quarter of 2025. The Atlanta Fed GDPNow projected that production was forecasted to be negative for the quarter. Buying low enthusiasts pounced on the opportunity for a discount while inflation data came back positive.
Conclusion
S&P 500 -0.98% | NASDAQ -3.47%
The month of February is a short month and, unfortunately, traders were left short of breath after the notable declines in equity markets. The S&P500 fell 1.4% for the month and the Nasdaq fell 2.8% over the same period. The moves to safety were evidenced by the decline in treasury rates and traders’ appetite for risk-on assets, like technology, was waning. The threat of tariffs has taken front-and-center. Any retaliatory measures from other countries will be likely. It boils down to supply and demand for specific goods and whether the economic pinch will be felt sooner rather than later. Inflation could ramp up but there was some good news about price increases more recently that gave some peace of mind in the latter part of the week. A correction could be on the horizon (10% fall from previous highs) which could restabilize markets that have recently been overvalued. This trend could extend through the rest of the 1st quarter until the impact of any new tariff policy is truly felt and quantifiable.
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