March 2, 2025
Volume 12, Issue 09
Weekly Recap
Most domestic equity indexes declined again last week, although the Dow Jones Industrial Average finished 0.95 percent higher, adding to its year-to-date outperformance versus the other major benchmarks. Growth stocks significantly underperformed value, and the Nasdaq Composite recorded its worst weekly drop since early September as tech stocks, particularly the so-called Magnificent Seven, declined amid ongoing regulatory uncertainty and concerns that the multiyear artificial intelligence-fueled rally could be losing steam. Shares of NVIDIA fell 8.48 percent on Thursday following the chipmaker’s highly anticipated earnings report. More tariff fears also continued to be a drag on equities as President Trump reiterated plans to impose new levies on several trade partners by March 4, although not all traders expect him to follow through.
The highlight of last week’s economic calendar came from the Labor Department’s release of its core personal consumption expenditures price index on Friday morning. The Federal Reserve’s preferred inflation gauge showed prices rising by 0.3 percent in January, largely in line with expectations. On a year-over-year basis, prices rose 2.6 percent, down from December’s reading of 2.9 percent but still well above the Fed’s long-term target of 2 percent. The report also noted that while personal incomes rose 0.9 percent in January, spending contracted, a sign that consumers may be exercising caution in the face of persistent inflation and uncertainty.
Perhaps relatedly, the Conference Board reported its February Consumer Confidence Index on Tuesday, which fell 7 points to 98.3, the steepest monthly drop since August 2021. Notably, the expectations portion of the index, which gauges consumers’ short-term outlook for income, business, and labor market conditions, dropped below 80 for the first time since June 2024 (readings below 80 can be indicative of a recession ahead). The report also noted that average 12-month inflation expectations rose sharply in February from 5.2 to 6 percent. The survey results seemed to help fuel broader economic growth concerns following a slew of worse-than-expected data releases over the past few weeks.
In other economic news, the Commerce Department reported that the U.S. economy grew at an annualized rate of 2.3 percent in the fourth quarter of 2024, buoyed by resilient consumer spending, which advanced 4.2 percent during the period. Both readings were unchanged from a prior estimate. For the full year, U.S. gross domestic product increased 2.8 percent.
Meanwhile, the Labor Department reported on Thursday that applications for U.S. unemployment benefits for the week ended February 22 rose by 22,000 to 242,000, the highest level since October. Accordingly, the four-week moving average increased by 8,500 to 224,000. The advance number for seasonally adjusted insured unemployment, also known as continuing jobless claims, was 1.86 million, a decrease of 5,000 from the prior week. U.S. Treasury securities generated positive returns last week, especially in the belly of the yield curve, amid the week’s generally disappointing economic data. T-bill rates remained mostly unchanged.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time
In the News
The stock market’s shine in the wake of President Trump’s election fully wore off in late February, with the new administration’s early policy priorities and weak consumer sentiment making investors uneasy about the economy.
Getting inflation under control since the worst surge in decades has been a bumpy process in recent months. New data on Friday showed a little progress, but also an unexpected pullback in consumer spending, complicating the path forward for the Federal Reserve as it debates when to restart interest rate cuts. The central bank’s preferred inflation measure, released on Friday, climbed 2.5 percent in January from a year earlier, slightly lower than the previous reading of 2.6 percent but still well above the Fed’s 2 percent target. On a monthly basis, prices increased 0.3 percent, in line with December’s pace.
America’s biggest employer, the federal government, is laying off workers in droves. Depending on how many, and which, jobs get cut, the blow to the U.S. job market could be merely glancing, or seriously damaging. See here for what it all means.
Proposed tariffs on Mexico and Canada, along with a tariff increase on Chinese goods, will go into effect March 4, President Trump said Thursday. Following uncertainty about whether the White House would impose the tariffs after last month’s pause, Trump said on Truth Social that his concerns about drug trafficking across both the northern and southern borders had not been assuaged. “Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” he wrote, adding that the planned 25 percent tariff on imports from Canada and Mexico would go through, along with a 10 percent tariff hike on Chinese imports, bringing that rate to 20 percent.
The Social Security Administration announced Tuesday that it is “immediately beginning to pay retroactive benefits” and will increase the monthly benefits of those who were affected by the Windfall Elimination Provision and Government Pension Offset, which were repealed under the Social Security Fairness Act.
Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10 percent of earners – households making about $250,000 a year or more – are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets. Those consumers now account for 49.7 percent of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36 percent.
Around half the world’s population live in places that held elections in 2024. Some 1.65 billion ballots were cast across more than 70 countries. But while the number of democratic elections in a single year has never been higher, 2024 also brought big challenges. According to the latest democracy index, global democracy is in worse shape than at any point in the nearly two-decade history of the index. If, as I do, you believe economies and markets perform better when there is more freedom, you might take a look at this (DISCLOSURE: I own it).
Fewer people are moving today, but those who are, are mostly moving south. States with the biggest net population gains are Texas, Florida, and North Carolina. States with the biggest net losses are California, New York, Illinois, and New Jersey.
A Delta Dental poll released Tuesday found a 14 percent year-over-year decline in the tooth fairy’s average payment rate for a single lost tooth – from $5.84 to $5.01. In this economy, apparently even mythical creatures are feeling the strain. Data Dump: Personal Income and Outlays (PCE); Jobless Claims; Freddie Mac House Price Index; Pending Home Sales; Durable Goods; New Home Sales; Mortgage Applications; Home Price Indices.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- How Should Your Allocation Change with Age? (Nick Maggiulli)
- BRK 2024 Annual Report and Stuff (The Brooklyn Investor)
- Is the Future of Financial Advice Online? (David Blanchett)
This is the best thing I’ve read recently. The funniest. Also very funny. The creepiest. The most incredible. The most interesting. The most terrifying. Also terrifying. The best sign. Temper, temper. Good news. RIP, Roberta Flack. Fontastic. Actor Gene Hackman died Wednesday at the age of 95. He appeared in dozens of memorable films, including Bonnie and Clyde, The French Connection, Mississippi Burning, Hoosiers, The Conversation, Unforgiven, and many more. He won two Academy Awards and became known as a veritable Hollywood everyman over the course of his long career. He and long-time friend Dustin Hoffman talk about budgeting when they were starting out and broke here (my mother used envelopes of cash she carried around in her purse).
Pre-retirees envision an active retirement lifestyle with traveling (79 percent) and exercising (71 percent) rising to the top of their lists. However, watching television is the top activity for current retirees (83 percent).
“Fortune favors the prepared.”
~ Howard Hawks
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets. Madison Avenue Securities, LLC | 13500 Evening Creek Drive N, Suite 555 | San Diego, CA 92128 US
