Market Commentary

For the week ending 3/21/2025

 

U.S. stocks reacted positively to Federal Reserve Chairman Jerome Powell’s announcement that the Fed would leave interest rates unchanged for the near future, and maintain its outlook for two rate cuts in the year ahead. All three major indices ended the week up slightly.

The equity market had dipped into correction territory, before rebounding following Powell’s midweek remarks.

In additional good news for the U.S. economy, retail sales rose 0.2%, though other key economic readings showed that the economy is slowing. The Conference Board’s Leading Economic Index (LEI) fell 0.3% to 101.1 in February, driven by weaker consumer expectations for business conditions and fewer new manufacturing orders. While still negative, LEI does remain on an upward trend for the year.

Initial jobless claims rose to 223,000, slightly below estimates, and an indication that the labor market remains healthy. Federal government layoffs will likely drive that number higher in the coming months. However, the unemployment rate remains relatively low at 4.1%.

Meanwhile, February housing numbers offered a mixed bag as housing starts rose 11.2%, well ahead of consensus expectations. Single family housing starts rose 11.4% for February and building permits fell 1.2%.  Home builder sentiment declined to lowest level in seven months, according to the National Association of Home Builders’ March report.

While anticipation of and confusion around tariffs continue to provide headwinds to most sectors of the economy, they have provided a temporary boon to manufacturing. U.S. industrial production rose by 0.7% in February, well ahead of expectations, and manufacturing output increased by 0.9%, which also beat expectations. A desire by companies to get out ahead of potential tariffs likely fueled both of those areas, though those numbers also may indicate that a manufacturing recovery is underway.

For the week, the Dow closed up 1.2% at 41,985, the S&P 500 rose 0.5% to 5,668 and NASDAQ closed up a tick at 0.2% at 17,784.

The yield on the 10-yr. Treasury declined slightly to 4.25%

Oil rose 2.6% to $68.30/bbl and gold closed up nearly 1% at $3,018.

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