The financial landscape often resembles a turbulent sea, with waves of volatility crashing against the sturdy ships of the stock market. This past week was no exception, as mixed earnings reports stirred the waters, leading to a notable market rebound. After enduring a four-week losing streak, U.S. stocks managed to close the week on a positive note, with all major indices posting moderate gains. The S&P 500 ended at 5,667, up by 0.51 percent, while the Dow Jones Industrial Average experienced a stronger performance, climbing 1.20 percent to close at 41,985. The Nasdaq, although more subdued, finished at 17,784 with a 0.17 percent increase, and the small-cap Russell 2000 rose by 0.63 percent to end the week at 2,056.
A significant driver behind this resurgence was the performance of large-cap stocks, which are typically less volatile and more resilient during uncertain economic times. These stocks, which are characterized by a market capitalization of $10 billion or more, include well-established companies like Boeing, United Healthcare, and JPMorgan. For instance, Boeing saw a 10 percent surge after landing a significant contract with the Air Force, while United Healthcare and JPMorgan gained 5.77 percent and 3.95 percent, respectively. Their robust performance underscores the market’s preference for stability amidst fluctuations.
The week was marked by a blend of economic headlines that influenced trading patterns. A particularly notable moment came on March 17, when the February retail sales report was released. Although the data indicated a recovery from January’s downturn, it fell short of market expectations, leading to a decrease in bond yields that ultimately provided a lift to equities. This interplay between economic indicators and market sentiment highlights the delicate balance investors must navigate.
However, the optimism was short-lived as the market faced a setback on March 18, primarily driven by a nearly 2 percent decline in the Nasdaq. This drop was attributed to the kickoff of Nvidia’s much-anticipated conference, which failed to excite tech investors. Yet, the tide turned once again on March 19 following the Federal Open Market Committee’s decision to maintain the federal funds rate. This widely expected move was coupled with a reassuring statement from Federal Reserve Chairman Jerome Powell, who characterized any potential shortfalls from proposed tariffs as “transitory.” Powell’s clarity provided the market with the stability it craved, triggering a relief rally. “Jerome Powell’s press conference was the steady hand that the markets needed right now,” remarked Clark Bellin, president and chief investment officer of Bellwether Wealth. His comments reflect a broader sentiment among investors who appreciated the Fed’s commitment to managing inflation and supporting economic growth.
The subsequent day, however, brought renewed anxiety as the Conference Board reported a decline in its Index of Leading Economic Indicators (LEI) for February. This decline raised concerns about a potential economic slowdown, with Justyna Zabinska-La Monica, a senior manager at the Conference Board, noting that consumers were growing increasingly pessimistic about future business conditions. Despite this grim outlook, there was a glimmer of hope as the LEI’s six-month and annual growth rates have shown an upward trend since the end of 2023, suggesting that while challenges remain, the economy may not be as dire as it once seemed.
On March 21, the market experienced another bout of volatility, but a sharp rally just minutes before closing helped push equity averages higher for the week. Mixed earnings reports continued to shape market sentiment. Darden Restaurants provided an optimistic sales and earnings outlook, resulting in a 7.50 percent gain for the week. Consumer discretionary stocks, such as McDonald’s, also saw slight increases. Conversely, Nike and FedEx reported disappointing forecasts, leading to declines of 5.19 percent and 4.90 percent, respectively.
Looking ahead, Bellin remains optimistic about U.S. large-cap equities, suggesting that there is still significant cash on the sidelines, ready to be deployed in what he describes as “plenty of buying opportunities,” particularly in big-cap tech, which has faced considerable pressure in recent months. As the Federal Reserve meeting fades into the background, market participants will be keenly watching for policy developments from Washington and the upcoming release of the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, at the end of the month.
In conclusion, this week’s market performance illustrates the complex interplay of economic indicators, corporate earnings, and investor sentiment. As investors gear up for the next chapter, the hope is that clarity from policymakers and a steady economic hand will guide the markets through the choppy waters ahead.
