Market Update: February 24, 2025
On a week shortened by President’s Day, economic data included mixed results for regional manufacturing, while leading economic indicators fell back from the prior month, as did consumer sentiment and home starts and sales.
Equities fell back in the U.S. with investors cautiously looking at future policy and consumer impact, while international stocks performed better, as recent trends have moved in their direction. Bonds ticked up slightly and commodities were mixed, with little change oil prices.
After a promising start earlier in the week, U.S. stock fell back into the negative with uncertainty about tariffs after several comments from the administration, although light on detail. Thursday and Friday were soured by weaker consumer confidence and cautious guidance from Walmart, despite above-consensus earnings results, concerning anticipated weaker results in the year ahead due to persistent inflation and tariff uncertainty.
Overall, value was little changed, while growth fell back by several percent. Leaders included small gains of about a percent or more in more defensive areas such as utilities, health care, and consumer staples, in addition to energy. Worst off were -4% declines in consumer discretionary and communications services, which were impacted by the fears of a pullback in consumer spending.
Foreign stocks fared better than U.S. last week, with mixed net results after being translated back in U.S. dollar terms, with Japan faring better and Europe worse. News in the European region was somewhat mixed, with U.K. core inflation back up to 3.7%, offset by rising hopes for a Ukraine-Russia peace deal of some sort in the months ahead. Emerging markets gained a few percent, led by strength in China, which was helped by stronger earnings results from the technology sector. The elections in Germany over this past weekend had been closely-awaited for weeks, due to Germany’s large sway within the EU and role of manufacturing workhorse, but with the unfortunate status of being in a recession for the past several years (in contrast to most other countries in Europe), not helped by their reliance on trade. Over the weekend, the German center coalition appeared to hold, although the far-right saw gains in response to an immigration backlash—not an uncommon reaction in a variety of countries in recent months. A key area of focus has been how much the fiscal purse strings can be loosened in efforts to spark better growth, as the economy has been in contraction for about two years. Over that time, European markets have been wrestling with a potential structural evolution toward higher defense spending (less aid from the U.S.) and higher energy costs (moving away from abundant Russian gas).
Bonds saw slight gains, as interest rates pulled back by the week’s end, with U.S. government and investment-grade corporates outperforming high yield and bank loans.
Commodities were mixed overall, with gains in industrial and precious metals offset by declines in agriculture, and little change overall in energy. Crude oil prices fell back by roughly a half-percent to just over $70/barrel, while natural gas spot prices rallied by 11%, with continued cold winter weather across much of the U.S., although forecasts have started to turn warmer.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.