Market Update: March 24, 2025
Economic data included the Federal Reserve keeping rates unchanged, with a balanced commentary about current conditions but noting uncertainty about the economic path ahead. Positive data came in from retail sales and industrial production, in addition to existing home sales and housing starts. However, several regional manufacturing indexes fell back.
Equities rebounded for the first time in a month in the U.S., while international stocks ended flattish. Bonds gained along with falling yields. Commodity prices generally rose, along with stronger energy.
U.S. stocks snapped a month-long losing streak, with gains in both large and small cap stocks, and value continuing its streak of outperforming growth. By sector, energy, financials, and health care led with gains of one to several percent; materials, consumer staples, and utilities suffered minimal declines of a fraction of a percent. Real estate also declined slightly. Markets turned around from the prior week, bouncing off of -10% correction territory for the time being, helped in mid-week by a more dovish tone about the economy struck by Fed Chair Powell. This was in contrast to some signs of pessimism elsewhere, such as consumer sentiment around the unclear upcoming tariff response. (Although by this morning, some of the administration’s rhetoric about the April 2 trade ‘Liberation Day’ has been toned down a bit.)
Foreign stocks also saw minor gains, with strength in Japan offsetting flattish results in Europe. Uncertainty about trade continues to hover over Europe and Japan both, although the German spending response had been taken positively. The Bank of England, Bank of Japan, and Swedish Riksbank each kept policy interest rates on hold for now, as they absorb changing global growth dynamics. The Swiss National Bank, though, cut by a quarter-percent with low inflationary pressure and higher downside risk. In emerging markets, gains in India, South Korea, and Brazil (despite a percent hike in rates but markets were glad it wasn’t more dramatic) offset declines in China and Turkey (the latter of which fell -20% as the mayor of Istanbul, and opponent of President Erdoğan, was detained on corruption and terrorism charges). Some Chinese industrial and retail sales data came out better than expected, which may have influenced perceptions about the possible robustness of forthcoming government policy stimulus (their announced ‘Special Action Plan’). That plan is intended to boost personal consumption above all else, but details on implementation have been sparce.
Bonds saw positive results across the board last week, as long-term yields declined, with continued investor concerns around the economy. Investment-grade corporates outperformed U.S. Treasuries a bit, as credit spreads came in slightly. With a stronger U.S. dollar, foreign developed market and emerging market bonds were mixed.
Commodities were higher overall for the week, with gains in energy, agriculture, and precious metals, which offset declines in industrial metals. Crude oil prices rose 2% last week to $68/barrel. The oil environment reflected a variety of factors including new sanctions on Iran and OPEC+ production cuts, along with the prior weekend’s U.S. military strikes against Houthi positions, following the resumption of their targeting of ships in the Red Sea. The risk, of course, is that a major transport route for a good proportion of the world’s oil is cut off for some period of time. However, fears of a slowing global economy and impact on demand offset these supply factors somewhat.
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.