Are The Wagons Circled?

The week of March 3 to March 7, 2025, was marked by significant volatility across major U.S. stock indices, influenced by trade tensions, economic data, and corporate earnings.

Weekly Performance:

• S&P 500: Declined 3.1%, marking its steepest weekly drop since September 2024. (investopedia.com)
• Dow Jones Industrial Average: Fell 2.4%, reflecting investor concerns over potential economic slowdowns. (investopedia.com)
• Nasdaq Composite: Decreased 3.5%, entering a correction phase, down over 10% from its recent highs. (wsj.com)
  

Key Factors Influencing the Market:

• Trade Tensions: The U.S. imposed 25% tariffs on goods from Canada, Mexico, and China, leading to retaliatory measures and heightened market uncertainty. (jhinvestments.com)
• Economic Data: February's job growth was modest, with 151,000 jobs added, slightly below expectations, indicating a potential economic slowdown. (jhinvestments.com)
• Federal Reserve's Stance: Fed Chair Jerome Powell expressed optimism about the economy, suggesting a cautious approach to monetary policy easing, which helped stabilize markets later in the week. (reuters.com)

Notable Corporate Movements:

• Broadcom: Shares surged 8.6% after reporting strong quarterly earnings, highlighting growth in its AI segment. (investopedia.com)
• Hewlett Packard Enterprise: Stock plummeted 12% following a disappointing earnings outlook, raising concerns about future profitability. (investopedia.com)

In summary, the week was characterized by heightened volatility due to escalating trade disputes, mixed economic indicators, and varied corporate earnings reports, leading to significant declines across major stock indices.

February saw the addition of 151,000 jobs, a stable but modest gain.

Worst Week in Months For Wall St.:

The S&P 500 seesawed throughout the day on Friday, marking a volatile end to a turbulent week, as investors parsed the latest employment data and comments from Fed Chair Powell about the direction of interest rates.

Even though the index ended the day with a gain, the S&P 500 notched its third consecutive week of losses with a drop of 3.1%, its sharpest weekly decline since early September.

Much Of The Sell-Off:

The sell-off has been driven by major technology companies, which, due to their size, significantly impact broad indexes. Since the S&P 500 peaked on February 19, the index has fallen more than 6%.

The Russell 2000 index, composed of smaller companies more exposed to economic fluctuations, has declined even further than the S&P 500. The index fell 3.8% last week and is now almost 15% below its recent peak reached in November.

All 11 sectors of the S&P 500, except healthcare stocks, ended the week in the red.

Stick with companies that have tariff protections or benefit from the president’s trade actions.

President Donald Trump’s unpredictable tariffs are roiling markets. Instead of worrying incessantly about a trade war, consider alternatives: invest in companies with strong growth drivers or those poised to benefit from trade turmoil.

“If you expect additional tariffs and disruption, the kinds of companies that tend to benefit are domestically oriented,” says Que Nguyen, chief investment officer of equity strategies at Research Affiliates. “Look for ones that have a moat where they can pass on costs to consumers.”

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