3-31-25 Monday Minute
By Dan Stober on March 31, 2025
Markets popped higher to start trading last week on potential tariff relief as trade deals get negotiated and large foreign investments in the U.S. are announced. The excitement didn’t last long, however. Auto tariffs announced on Wednesday brought stocks lower across the board Wednesday, Thursday, and into the close on Friday. The unknown of what negotiations have happened, or will happen, leading to this week’s reciprocal tariff date of April 2nd is near impossible to effectively price in. The market seems to be pricing in the worst-case scenario. Adding to the negativity, the core personal consumption expenditure (PCE) price index came in a little hot, rising 2.8% year over year and above the expected 2.7% gain. Meanwhile, consumer spending posted a smaller-than-expected increase and economic policy uncertainty has reached the highest level since 2020. For the week, the DOW finished 1% lower, S&P 500 1.5% lower, and the NASDAQ finished 2.6% lower. While the markets move short-term on sentiment and the current news cycle, long-term markets are driven by earnings and interest rates. The S&P 500 earnings estimates for the full year have been revised lower over the last couple of months, but they still point to roughly 10% growth, which is faster than the long-term historical average of 6%–7%. Unemployment remains low, the Fed remains in a dovish/easing position, and the new administration may start shifting its attention from trade and cost cutting to more market-friendly policies, which are taking longer to implement. Diversified portfolios are still benefiting from allocations in International and value equities, alternatives, as well as bonds. This week we will receive March’s ISM Manufacturing report on Tuesday, ISM non-manufacturing on Thursday, and non-farm payrolls report on Friday, and hopefully some tariff clarity. Markets are mixed to start trading.
https://www.cnbc.com/2025/03/30/stock-market-today-live-updates.html