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S&P 500 & NASDAQ Fall For Second Week as Tariff Threats Escalate
Equity markets fell for consecutive weeks as concerns around tariffs escalated. Global equities (represented by the MSCI All Country World Index) were down -1.30% while domestic stocks (represented by the S&P 500 Index) were down -0.95%. For the month of February, we saw the Nasdaq pull back almost 4%, while the S&P 500 was down 1.4%, and the Dow dropped 1.6%.
US Consumer Confidence
The Conference Board’s Consumer Confidence Index was released on Tuesday, coming in well below economists’ expectations. The reading of 98.3 is down from January’s revised figure of 105.0 and is the largest monthly decline in three and a half years. Inflation risk is the primary contributor to the lower reading.
Inflation
Inflation remained relatively stable in January but continued to be above the Federal Reserve’s 2.0% long-term target. Friday’s January PCE reading showed inflation rose at an annual rate of 2.5%. This was in line with expectations and below the 2.6% figure recorded the previous month.
Q4 Earnings
Companies in the S&P 500 posted an average earnings gain of 18.2% over the same quarter a year earlier, according to FactSet data from the recently concluded fourth-quarter earnings season. This will mark the highest earnings growth rate since Q4 2021 by the index. This was much higher than 11.7% growth rate that analysts had expected heading into Q4 2024 earnings season.
Looking Ahead
This upcoming Friday marks the first Friday of the month which means the latest monthly labor market report is due. The expectation is the report will show whether January’s slowdown in jobs growth extended into February. In January, the economy generated 143,000 new jobs, down from 307,000 in December and 261,000 in November. However, January’s report showed the unemployment rate slipped from 4.1% to 4.0%.
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.
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