The Week in Review: 03/17/25

“Everybody in the world is a long-term investor until the market goes down.” – Peter Lynch

Good Morning,

It was another disappointing week for stocks. The market has been in a downtrend for a few weeks based on growth concerns and tariff fears, which continued last week. The S&P 500 broke below its 200-day moving average and entered correction territory (i.e. 10% from its February 19 high) while the Nasdaq Composite extended its decline in correction territory. 

Right out of the gate on Monday, fears about economic growth percolated after President Trump said in an interview the previous weekend that the economy is going through a "period of transition" and he declined to answer directly if the U.S. will experience a recession.

Trade war tensions increased after President Trump announced that the US will impose a 50% tariff on Canadian steel and aluminum imports, starting Wednesday, instead of the originally proposed 25%.

The escalation followed a retaliatory measure by Ontario, which imposed a 25% tariff on exports of electricity to the U.S. in response to the originally planned 25% tariffs on Canadian imports.

President Donald Trump also announced a potential 200% tariff on European beverage imports, including wines and spirits. This move was in response to the European Union's recent tariffs on American whiskey.

Historically, corrections have led to rewarding recoveries.

Source: Bespoke Investment Group

This has been the swiftest correction in 75 years, leaving investors most anxious.

Fear is high!

Last week was a lesson in volatility, allowing us to dip into “correction” (-10%) territory for a brief period.

Source: Bespoke Investment Group

I put quite a bit of value in Technical Analysis…

This chart has a strong resemblance to an inverted “head & Shoulders” formation, which is very often a Bullish pattern.

I am also student of history…

From its close on 2/19 to 3/12, the S&P 500 declined 8.6%. That ranks below the 2nd percentile of all 15-trading day moves since 1953. In prior periods when three-week returns were in the bottom two percentiles of historical returns, the S&P 500’s median 12-month gain was 20.6% with positive returns 83% of the time. (Source: Bespoke Investment Group)

On the economic front…

Last week's inflation data was relatively positive, yet the markets didn't respond in kind due to the understanding that inflation remains above the Fed's 2.0% target and trade policy may negatively impact future prints.

The Consumer Price Index (CPI) report for February showed inflation rising at a slower-than-expected pace, providing a measure of relief to markets after last month's hotter-than-expected reading. On a year-over-year basis, total CPI was up 2.8% versus 3.0% in January and core-CPI was up 3.1% versus 3.2% in January. The February Producer Price Index also contained some lower-than-expected headline prints.

Other data last week included a relatively low level of weekly jobless claims, along with a preliminary University of Michigan Index of Consumer Sentiment survey for March, which dropped to 57.9 (consensus 65.6) from the final reading of 64.7 for February, marking the third straight drop in sentiment. In the same period a year ago, the index stood at 79.4.

Mega cap stocks had an outsized impact on the broader equity market.

Only two S&P 500 sectors settled in the green -- energy (+2.6%) and utilities (+1.9%) -- while the consumer staples (-4.3%), consumer discretionary (-3.7%), and communication services (-2.5%) sectors registered the largest declines.

Have a wonderful week!

Michael D. Hilger, CEP^®

Managing Director
Senior Vice President, Wealth Management

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