Equity Markets End Week Lower, Amid Another Wave of Volatile Headlines

Equity Markets End Week Lower, Amid Another Wave of Volatile Headlines

Equity markets started the week strong but reversed course after another volatile week of headlines. U.S. Tech stocks experienced the largest decline. Overall, for the week global equities (represented by the MSCI All Country World Index) finished down 1.34% while domestic stocks (represented by the S&P 500 Index) were down 1.52%.

Personal Consumption Expenditures Index (PCE)

Friday’s reading of the Personal Consumption Expenditures Index saw inflation on the rise again moving further above the Fed’s 2.0% long-term target. Core PCE inflation excluding food and energy prices rose at an annual rate of 2.8% in February. This was above both economists’ consensus forecast and the previous month’s figure.

U.S. Consumer Sentiment

The University of Michigan’s consumer sentiment survey reported a significant drop to 57.0, the lowest reading since 2022. Survey respondents cited several different reasons, like rising prices, concerns over proposed tariffs, and the expectation of a rise in unemployment.

U.S. Large-Cap Value Stock

U.S. large-cap value stocks continue to outperform their growth counterparts by a wide margin. The large-cap value index was down just 0.4% while the large-cap growth index was down over 2.5% for the week. Looking at the performance Year-to-date, the U.S large-cap value index is positive a little over 1%, while the growth index is down 10%.

Bond Market

The spread between BBB (lowest rung of investment grade bonds) and investment grade corporate bonds remains near 1-year lows at 0.23%, suggesting credit markets are not signaling a growth scare. Historically, spreads tend to widen significantly during recessions or global slowdowns, which we are not seeing today. So, while the equity markets continue to price in weaker growth, the bond market hasn’t moved into agreement with that same sentiment.

Looking Forward

For the week ahead, this Wednesday, April 2nd a new wave of Tariffs are expected to be announced. It’s also the first Friday of the month, which means we have another jobs report on deck. A strong print could complicate the Fed’s path to rate cuts, while a weak one could increase possible recession fears.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.