Stocks rallied on Friday but still closed with steep weekly losses. The Dow Jones Industrial Average (DJIA) declined by 2.37%, while the S&P 500 (SPX) lost 3.10% on the week, its worst showing since September 2024. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) dropped by 3.45% and 3.27%, respectively, ending in correction territory. The DJIA is the only main index still positive year-to-date.
Markets opened sharply lower on Friday, as weaker-than-expected jobs data weighed on sentiment. February payrolls growth missed forecasts, while January’s numbers were revised sharply downward. The unemployment rate unexpectedly inched up to 4.1%, while earnings rose at a slower pace than economists projected.
All in all, February’s report reflected a cooling job market, adding fuel to growing expectations of an economic downturn. Markets have been on a roller-coaster ride in recent weeks, with Trump’s policy flip-flops – particularly on tariffs – hitting consumer and investor sentiment. The President’s decision on Thursday to postpone tariffs on Mexican and Canadian imports covered by the USMCA did little to lift spirits, instead muddying the outlook further.
Stocks rebounded later in the day as Jerome Powell offered a dose of optimism regarding the economy. The Federal Reserve Chair said that the “U.S. economy continues to be in a good place” and monetary policy was “well-positioned to wait for greater clarity.” Just a day earlier, Atlanta Fed President Bostic’s comments that that rates could stay unchanged for longer worked in the opposite direction, adding to downward pressure on stocks.
Thus, the market’s bounce following Powell’s remarks may be a sign that investors aren’t ready to abandon the rally just yet, looking for any reasons to buy the dip. Not long ago, any sign of labor market weakness would have been a bullish signal, reinforcing the Fed’s case for rate cuts, whereas even a hint of a pause in monetary easing would send stocks tumbling.
Powell’s comments calmed the markets, but investors shouldn’t ignore another policymaker’s warning. Fed Governor Lisa Cook cautioned that stocks were “susceptible to large declines” as elevated valuations increase their vulnerability to negative economic news. While overvaluation doesn’t guarantee an imminent crash, it adds to market risks, on top of policy uncertainty and mixed economic data.
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.
» February’s CPI and CPI ex. Food and Energy (Core CPI) – Wednesday, 03/12 – The CPI report is one of the two key indicators used to measure inflation (the second one is the Personal Consumption Expenditures, or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlook, and directly affects the Federal Reserve’s policy rate decisions.
» February’s Producer Price Index (PPI) and PPI ex. Food and Energy – Thursday, 03/13 – This report reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods – directly affecting retail pricing – PPI is seen as a telling signal of inflationary pressures. This makes it a leading indicator for the following month’s CPI. Thus, the PPI directly impacts the overall inflation outlook among policymakers.
» March’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 03/14 – These reports portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which comprises about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s Index of Inflation Expectations calculations.
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