Everything to Know about Macro and Markets
Friday opened on a down note but staged a strong turnaround late in the trading day, helping close the week in the green. The Dow Jones Industrial Average (DJIA) ended the week with a gain of 1.2%, while the S&P 500 (SPX) rose by 0.51%, snapping a four-week losing streak. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) added 0.17% and 0.25%, respectively.
Still Buying the Dip
Another choppy week has gone by, with volatility exacerbated on Friday by a “Triple Witching” event, in which roughly $4.7 trillion worth of options contracts expired – one of the largest expirations since December. Even before that, the week had been a rollercoaster, with Monday’s surge giving way to Tuesday’s drop, then staging a Fed-induced rally on Wednesday just to give up the gains on Thursday as trade-war fears returned.
As concerns over the tariff impacts on growth and inflation add to worries over still-elevated stock valuations, analysts forecast continued market volatility until at least the second half of the year, with no new records in the cards for the next several months. Several leading brokerages have cut their end-year targets for the S&P 500, though many still foresee a low double-digit annual increase.
Facing a long stretch of volatile, sideways trading amid rising economic risks, many mutual and hedge funds are rotating into international equities. However, year-to-date losses in all major indexes haven’t deterred the retail crowd. Individual investor inflows into U.S. stocks amounted to more than $12 billion in the week to March 19 – when the S&P 500 briefly fell into correction territory – significantly above the 12-month average. This buy-the-dip doubling down may be a contrarian signal of a nearing bear market or a sign that retail investors are not buying the recessionary forecasts.
“Transitory” is Back
In fact, investors have good reason to be more optimistic about the economy than headlines suggest. The Federal Reserve – which held rates steady, as expected – confirmed that the economy remains healthy despite increasing uncertainty. While soft data – such as consumer sentiment and PMI indexes – have been deteriorating, hard data, including GDP growth and job-market numbers, continues to come in solid.
Although the Fed has increased its expectations for inflation in 2025 while lowering its GDP growth projection, the takeaways from the central bank’s meeting were largely positive. Policymakers said they expect 50 basis points of cuts this year, unchanged from their previous projection in December. Moreover, the Fed Chair Jerome Powell stated that the Fed views any possible tariff impacts as “transitory,” with data still supporting their outlook for inflation to decline to the 2% target over a longer period.
On the one hand, the Fed’s dovish tone supported the flagging market sentiment, helping the S&P 500 and the Nasdaq avoid a fifth straight week of losses. Conversely, the return of the “transitory” rhetoric leaves an uneasy feeling of déjà vu from early 2021, when the post-COVID inflation surge caught policymakers unprepared. Then, the central bank’s sticking with the “transitory” narrative for too long forced it into aggressive rate hikes in 2022, creating greater risk of a hard landing.
Let’s hope the Fed won’t be behind the curve this time, as many of the factors that helped the U.S. economy avoid recession then – such as surging savings and pent-up demand – are nowhere to be found this time around.
Stocks That Made the News
▣ Super Micro Computer (SMCI) was the best S&P 500 performer on Friday after JPMorgan upgraded the stock to “Hold” from “Sell.” JPMorgan’s analysts pointed to likely gains from strong demand for AI servers incorporating Nvidia’s (NVDA) Blackwell chips.
▣ Tesla (TSLA) shares rebounded after CEO Elon Musk held an all-hands meeting where he expressed optimism about the future of the company, shoring up optimism after a nearly 40% drop year-to-date.
▣ Boeing (BA) stock surged by over 10% over the week after the aircraft manufacturer received a U.S. Air Force contract to build the next-generation F-47 fighter jet. Shares of defense contractor Lockheed Martin (LMT), which lost out to its rival on this contract, slipped on the news.
▣ FedEx (FDX) tumbled after the company reported weaker-than-expected quarterly earnings and cut the full-year outlook, citing economic uncertainty.
▣ Nike (NKE) fell after the sports apparel producer warned that its sales could be impacted as sliding consumer confidence is hurting demand.
▣ Micron Technology (MU) was the worst-performing stock in the S&P 500 on Friday despite posting better-than-expected revenue and earnings, as the memory chipmaker’s gross margins narrowed significantly, raising analyst concern.
Upcoming Earnings and Dividend Announcements
The Q4 2024 earnings season is nearly over, but some notable earnings releases are still scheduled for this week.
The reports in focus are arriving from McCormick & Company (MKC), Chewy (CHWY), Dollar Tree (DLTR), Cintas (CTAS), Paychex (PAYX), Jefferies (JEF), Lululemon Athletica (LULU), and TD SYNNEX (SNX).
Ex-dividend dates are coming this week for Cincinnati Financial (CINF), Johnson Controls (JCI), Altria Group (MO), Best Buy Co (BBY), British American Tobacco (BTI), Medtronic (MDT), Keurig Dr Pepper (KDP), Dick’s Sporting Goods (DKS), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.