07 Mar TLR Week in Review: March 7, 2025

TLR Week in Review: March 7, 2025

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Welcome to this week’s edition of The Lonely Realist Week in Review. Markets have faced another round of turbulence, triggered by shifting tariff policies, renewed anxieties about the global economy, and evolving signals from the Federal Reserve. Below, we merge the latest developments—ranging from a volatile stock market to changing consumer sentiment—into one concise overview.

Disclaimer: This article is provided for educational and entertainment purposes only. It does not constitute financial or investment advice. Please conduct your own research and consult a qualified professional before making any investment decisions.

U.S. Markets End a Turbulent Week Amid Tariff Uncertainty and Mixed Economic Data

After what has been described as the worst week for the stock market in many months, U.S. investors are still grappling with a cocktail of policy shifts, tariff uncertainty, and a mix of economic signals. While major indexes rebounded slightly on Friday, the week’s overall sentiment remains cautious as analysts piece together the impact of the latest jobs report, fluctuating tariffs, and remarks from Federal Reserve officials.

Markets Under Pressure

Equity Volatility and Weekly Losses

The S&P 500 experienced significant swings throughout the week, eventually closing Friday with a modest gain of 0.6% to 5,770.20. However, for the week as a whole, the index fell 3.1% – marking its steepest weekly decline since early September 2024. The Dow Jones Industrial Average and Nasdaq Composite also posted weekly losses of 2.4% and 3.5%, respectively.

Analysts attribute this volatility to the White House’s back-and-forth on tariffs, which has rattled investor sentiment, and to broader concerns about the U.S. economic outlook.

Tariff Turbulence and Policy Shifts

In recent days, President Donald Trump has alternated between imposing and pausing tariffs. Earlier in the week, a 25% tariff on imports from Mexico and Canada, along with a 10% duty on Chinese goods, rattled markets. Although Trump later granted a temporary reprieve on tariffs for certain Canadian and Mexican goods, the uncertainty has not subsided.

Market watchers now fear that these tariff maneuvers could reignite inflation and dampen economic growth, thereby pressuring corporate profits and investor confidence. The U.S. dollar, for instance, slid more than 3% over the week—the worst performance in over two years—reflecting a loss of safe-haven appeal amid these policy uncertainties.

Mixed Company Performances

While the overall market sentiment was bearish, not all sectors fared equally. Some key movements include:

• Broadcom (AVGO): Shares surged 8.6% on strong earnings and upbeat guidance driven by robust demand for its AI semiconductors.
• Walgreens Boots Alliance (WBA): Stock climbed around 7.5% following news of a $10 billion buyout by Sycamore Partners.
• Hewlett Packard Enterprise (HPE): Shares plunged 12% after the server and storage company issued a weak profit forecast, citing the negative impact of tariffs.
• Costco (COST): The retailer’s shares dropped approximately 6.1% on earnings that missed Wall Street estimates.
• Tech Sector: Major tech companies have experienced mixed fortunes—while Nvidia added roughly 2% and Apple and Alphabet showed modest gains, other giants like Microsoft, Amazon, Meta Platforms, and Tesla lost ground. Notably, Tesla has seen its market value nearly halved since December 2024.

Digital Assets

Bitcoin is currently trading around $86,200, after dipping from an intraday high of $91,700. This drop comes on the heels of President Trump’s executive order establishing a strategic bitcoin reserve—a move aimed at bolstering the legitimacy of digital assets amid regulatory uncertainty. Despite these efforts, cryptocurrencies continue to exhibit significant volatility.

Economic Data and the Labor Market

February Jobs Report

The U.S. Labor Department’s February jobs report showed that nonfarm payroll employment increased by 151,000—just below the 160,000 forecast by economists. This moderate gain extended the country’s streak of job growth to 50 consecutive months, although it raised concerns as it came with a slight rise in the unemployment rate to 4.1% (up from 4.0% in January).

Key details include:

• Sector Gains: Health care added 52,000 jobs, with significant growth in ambulatory services, hospitals, and nursing care. Financial activities saw a robust increase of 21,000 jobs, while transportation and warehousing added 18,000 jobs. Social assistance also grew by 11,000 jobs.
• Federal Employment: Federal government employment declined by 10,000 jobs—an early sign of the ongoing cuts from Elon Musk’s Department of Government Efficiency (DOGE).
• Part-Time Employment: The number of people working part-time for economic reasons jumped by 460,000 to 4.9 million, indicating that while layoffs have not yet materialized in the data, employers may be cutting hours rather than making outright cuts.

Wage Growth and Labor Force Trends

Average hourly earnings increased by 10 cents (0.3%) to $35.93, contributing to a 4% annual rise in wages. The average workweek remained stable at 34.1 hours, although some analysts note that fewer hours could signal a cautious approach by employers amid economic uncertainties.

Market and Policy Implications

Federal Reserve Chair Jerome Powell reiterated that the labor market remains “solid” and stressed that, despite the current uncertainties, there is no immediate need to adjust interest rates. With a probability of around 95% for rates to remain unchanged at the upcoming March meeting, the Fed appears willing to “sit on their hands” until more clarity emerges on the economic impact of Trump’s tariffs and government layoffs. This cautious stance is echoed by market analysts, who see the current volatility as a reflection of heightened uncertainty rather than a fundamental economic collapse.

Bond Markets and the U.S. Dollar

Treasury yields experienced volatility this week. The 10-year Treasury yield fell to as low as 4.22% following softer initial reactions to the jobs report but then edged back up to around 4.30% after Powell’s remarks. This fluctuation underscores market uncertainty regarding whether the current policy mix will be inflationary or growth-suppressing.

The U.S. dollar index (DXY) has been under pressure, sliding more than 3% for the week, as investors react to tariff news and a broader reassessment of risk amid policy shifts.

Looking Ahead: What to Watch

Tariff Developments and Trade Policy

Investors should closely monitor further moves by the Trump administration. With a one-month tariff reprieve on certain goods from Canada and Mexico, uncertainty persists. Any additional changes—whether further delays or imposition of new duties—could sway both equity and bond markets.

Upcoming Economic Data and Fed Speeches

Key events on the horizon include:

• Private Employment Data: Set to be released mid-week, which will provide further insight into private sector hiring trends.
• Nonfarm Payroll Report: Due Friday, this report will be scrutinized for any signs of labor market cooling or acceleration.
• Federal Reserve Speeches: A series of remarks by Fed officials, including Powell, are expected later today. Their insights will be critical in shaping market expectations for future interest rate moves.

Company Earnings and Sector Trends

Investors will continue to follow quarterly earnings, especially in the tech and consumer sectors. Mixed earnings reports—like those from Hewlett Packard Enterprise and Costco—indicate that not all companies are navigating the current environment successfully. Conversely, strong performance by companies like Broadcom and turnaround signs at Gap provide some positive signals.

On That Note

U.S. markets ended a turbulent week with a modest recovery on Friday, but the broader picture remains one of caution. Tariff uncertainty and policy flip-flops by the Trump administration have unsettled investors, driving weekly losses across major indexes and weighing on the U.S. dollar. Meanwhile, the labor market continues to expand, though job gains came in slightly below expectations and hints of a softer labor market are emerging—especially amid significant federal job cuts.

Federal Reserve Chair Jerome Powell’s reassurances that the labor market remains solid have provided temporary relief, but underlying concerns about inflation, slowing hiring, and potential policy missteps persist. As investors navigate this volatile environment, the focus will remain on key economic data releases and policy signals over the coming weeks.

For now, the market’s resilience is being tested by a mix of encouraging job growth and persistent headwinds from trade policy and fiscal uncertainty. The coming days will be crucial in determining whether the current volatility will subside or signal deeper economic challenges. In this environment, maintaining a cautious stance and staying alert to shifts in both policy and economic indicators will be essential for investors.

About The Lonely Realist Week in Review
Brought to you by Centennial Quantitative (CQ), this weekly update provides a pragmatic, realist perspective on the economy and investment strategies. While the short term may be marked by volatility and policy surprises, disciplined investors can still find compelling opportunities by balancing a defensive core with strategic long-term positioning.

Remember: This post is for entertainment and educational purposes only. It does not constitute financial advice. Always conduct your own research or consult a qualified professional before making any investment decisions.