Another eventful week saw main stock indexes close in the red. The Dow Jones Industrial Average (DJIA) dropped by 2.51%, while the S&P 500 (SPX) lost 1.66%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) registered weekly declines of 2.51% and 2.26%, respectively.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
The first part of the holiday-shortened week saw the S&P 500 reach its second and third record highs this year. However, sentiment took a hit after Walmart’s (WMT) muted guidance added fuel to investor worries over the economic outlook, sparked by weaker-than-expected data, the prospects of a trade war, and ongoing geopolitical uncertainties.
Several recent economic reports revealed cracks in the economy’s resilience. January’s housing market index fell to a five-month low, housing starts declined, and existing home sales dropped. Meanwhile, S&P Global reported that U.S. service-sector activity entered contraction territory, with its lowest PMI reading in over two years, overshadowing a continued rebound in manufacturing activity.
Analysts have also raised concerns over the effect of the Trump administration’s sweeping federal layoffs on the job market, adding to worries about consumption growth that were first sparked by Target, widely seen as a retail bellwether. These concerns were underscored by January’s consumer sentiment index, which fell to its lowest reading since November 2023, as household inflation expectations surged amid fears that tariffs would drive up prices.
President Trump announced his intent to impose additional tariffs on automobiles, pharmaceuticals, and lumber products as soon as April 2nd, signaling that these tariffs would be set at 25%. Transportation and airline stocks were particularly hard-hit, while rising policy uncertainty – combined with signs of economic weakness – pressured the broader market.
The Federal Reserve’s recent meeting minutes indicated that policymakers were prepared to hold rates steady, citing a “high degree of uncertainty” surrounding the economic outlook. Rate committee members expressed concerns about potential inflationary pressures stemming from the proposed tariffs and strong consumer spending.
However, the recent softness in economic data may force the central bank’s hand. Although many analysts caution that one set of data points does not necessarily reflect the economy’s overall health, mentions of “stagflation” – an economic condition characterized by low growth and high inflation – are becoming more frequent. A series of weaker-than-expected data points could increase the likelihood of further monetary support, as a slowdown in consumption might help curb inflation.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» Q4 2024 GDP Growth Annualized (second estimate) – Thursday, 02/27 – This report will provide an insight into changes in GDP from the previous quarter. Economists expect to receive a confirmation of the GDP growth rate signaled by the advance estimate released last month, which put Q4 2024 growth at 2.3% annualized. A higher-than-expected reading could further weigh on the projected for Fed rate cuts, while a lower-than-expected reading could provide the central bank with data to support rate reductions.
» January’s Pending Home Sales – Thursday, 02/27 – This report is a leading indicator of trends in the U.S. housing market and reflects contract activity in the market for existing homes, since this market accounts for 85% to 90% of U.S. home sales annually. It accurately reflects economic conditions and consumer confidence and is closely watched by investors and policymakers for clues about the health of the economy.
» January’s Core Personal Consumption Expenditures (Core PCE) – Friday, 02/28 – This report reflects the average amount of money consumers spend monthly, excluding seasonally volatile products such as food and energy. FOMC policymakers use the annual Core PCE Price Index as their primary inflation gauge.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
