Everything to Know about Macro and Markets
Stocks closed another turbulent week on a down note, with Friday marking the second-worst day of 2025 for U.S. equities. The Dow Jones Industrial Average (DJIA) ended the week with a loss of 0.96%, while the S&P 500 (SPX) fell by 1.53%, on course for its worst month since September 2023. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) dropped by 2.59% and 2.39%, respectively.
Slowdown Even Before the Tariffs
Stocks tried to keep up last week’s positivity, continuing their rise at the beginning of the week. However, markets reversed course on Wednesday as President Donald Trump’s announcement of impending auto tariffs intensified investor concerns about escalating trade tensions and potential retaliatory measures.
Thursday saw more selling pressure, with stocks sliding across the board. The final Q4 2024 GDP growth reading – coming in at 2.4% annualized – confirmed that the economy began slowing down even before the tariffs were announced, and investors fretted that Trump’s policies would amplify the economic slowdown.
Interestingly, despite a notable slowdown from Q3’s 3.1% pace, the fourth quarter’s growth surpassed initial estimates thanks to a surge in corporate profits over the previous quarter. Moreover, Q4 PCE inflation – the Federal Reserve’s preferred inflation gauge – was revised lower, underscoring the resilience of the U.S. economy at the end of last year. That strength, according to some analysts, may help the economy weather current policy uncertainties and downbeat consumer sentiment without slipping into a recession.
Between a Rock and a Hard Place
Friday brought more bad news on the macro front. February’s Core PCE came in hotter-than-expected at a 2.8% annual pace, reinforcing the persistence of price pressures. Meanwhile, consumer spending was weaker than economists predicted, despite better-than-expected personal income growth. The divergence between income and spending trends highlighted consumer caution about the outlook, while simultaneously weighing on growth prospects, with consumption still the key GDP driver.
The UoM Consumer Sentiment index’s final March reading further depressed investor sentiment, coming in at its lowest since November 2022 – marking a third straight monthly decline. At the same time, long-term household inflation expectations – a key Fed input – hit 4.1%, their highest level since June 2008.
As slowing spending is threatening to further drag on growth and inflation remains well above the Fed’s 2% target, the central bank finds itself in a precarious position vis-a-vis rate policy. With fears of stagflation rising, policymakers may already be behind the curve on supporting growth yet remain constrained by stubborn inflation.
Stocks That Made the News
▣ Shares of carmakers fell following the tariff news. General Motors (GM) – which imports more vehicles and parts than its U.S. rivals – tumbled nearly 8% over the week, while Ford (F) lost 3.7% and Stellantis (STLA) dropped 6.8%. Tesla (TSLA), which is less affected by the import tariffs than other automakers, gained 1.3% for the week, despite dropping on Friday along with other large- and mega-cap tech stocks.
▣ Nvidia (NVDA) saw its stock lose almost 9% for the week, extending its year-to-date slide to over 18%. Alphabet (GOOGL) was the second-biggest loser among the Magnificent Seven, with the broad-market selloff compounded by a costly settlement of a decade-old advertising lawsuit. GOOGL agreed to pay $100 million to resolve the 2011 case, which involved allegations that Google overcharged advertisers.
▣ While most tech stocks posted steep losses, Super Micro Computer (SMCI) registered one of the sharpest declines in the S&P 500, tumbling nearly 16% after Goldman Sachs downgraded the stock to “Sell.”
▣ AppLovin (APP) was another major loser, falling almost 18% after a third short-seller issued a report accusing the company of fraudulent practices.
▣ The stock carnage wasn’t limited to tech and automakers, spreading across nearly all industries. Lululemon Athletica (LULU) led Consumer Discretionary stocks lower, following a wave of analyst downgrades triggered by the company’s downbeat annual projections.
Upcoming Earnings and Dividend Announcements
The Q4 2024 earnings season is over, but some notable earnings releases are still scheduled for this week. The reports in focus are arriving from Conagra Brands (CAG), nCino (NCNO), Lamb Weston Holdings (LW), and Acuity Brands (AYI).
Ex-dividend dates are coming this week for Realty Income (O), State Street (STT), Air Products and Chemicals (APD), Comcast (CMCSA), Cisco Systems (CSCO), Progressive (PGR), JPMorgan Chase (JPM), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.