Markets

PhilStockWorld Weekly Wrap-Up – March 17-21 2025 – Stopping the Slide?

March 22, 2025

260

Key Points

It seems likely that the market’s late rally on Friday avoided a fifth straight down week, with the S&P 500 up 0.1% to 5,667.56, but momentum remains weak amid tariff and earnings concerns.
Research suggests tariff uncertainty and disappointing corporate earnings, like FedEx and Nike, drove volatility, overshadowing Fed’s steady rates and QT slowdown.
The evidence leans toward investors diversifying into gold (+15% YTD), Treasuries, and corporate debt, as US equities face a correction (-7.6% from February peak).
Unexpected detail: Despite the rally, AAII’s bearish sentiment hit 58.1%, a historical high, signaling caution despite mega-cap lifts like Apple (+2%).

Market Performance

The S&P 500 closed at 5,667.56, up 0.1% for the day, marking a slight weekly gain of 0.5% from last Friday’s 5,638.94, avoiding a fifth consecutive down week. The Nasdaq Composite rose 0.5% to 17,784.06, and the Dow Jones Industrial Average increased 0.1% to 41,985.35. However, the week was volatile, with the S&P 500 down 7.6% from its February 19 peak of 6,144.15, stuck in correction territory.

The Nasdaq Composite rose 0.5% to 17,784.06, and the Dow Jones Industrial Average increased 0.1% to 41,985.35, reflecting a late rally driven by mega-cap stocks but failing to reverse broader bearish trends.

Economic and Corporate Impacts

Economic data showed mixed signals: initial jobless claims at 223,000 (above 220,000 expected), Philadelphia Fed Index at 12.5 (below 10.0), and existing home sales up 4.2% to 4.26 million (beating 3.95 million). Corporate earnings disappointed, with FedEx missing guidance (-8%), Nike cutting outlook (-5.5%), Lennar underperforming (-4%), and Micron’s recovery doubts (-8%) fueling growth fears. These reports highlighted economic weakness, especially in consumer sectors.

Investor Sentiment and Strategy

Investors are shifting to diversification, with gold up 15% YTD, Treasuries climbing 3%, and corporate debt gaining, per Bloomberg’s analysis Diversification Strategies Outperform. The VIX dropped below 20, but AAII’s 58.1% bearishness—four weeks over 55%—signals caution, per Bespoke Investment Group Bearish Sentiment High. Mega-cap late surges (Apple +2%, Tesla +5.3%) masked broader weakness.

Looking Ahead

Next week, watch flash PMIs (Monday), durable goods (Wednesday), and PCE price index (Friday) for inflation clues. Tariff announcements on April 2 and Fed’s next moves will be critical, with earnings from KB Home, Chewy, and Walgreens adding color.

Market Performance and Weekly Trends

The week began with a -3% S&P plunge on March 17, driven by tariff fears and retail sales misses (+0.2% vs. +0.7% expected), per Seeking Alpha’s market recap Market Recap. Wednesday’s Fed decision—holding rates at 4.25-4.5% and slowing QT to $5B from $25B—sparked a +1.1% rally, per Monica L. Correa’s analysis Fed Rally. Thursday saw a -0.22% fade, with FedEx’s guidance cut (-8%) and tariff jitters, per Anuron Mitra Stocks End Lower. Friday’s +0.1% close, per the closing summary Closing Summary, avoided a fifth down week, but volume (4.5B NYSE, 8.9B Nasdaq) and AAII’s 58.1% bearishness, per Bespoke Investment Group Bearish Sentiment High, signaled caution.

Economic Data: Mixed Signals Amid Uncertainty

Economic releases painted a mixed picture. Initial jobless claims for March 15 were 223,000, above 220,000 expected, per the stock market update Jobless Claims. The Philadelphia Fed Index dipped to 12.5 from 18.1, below 10.0 expected, per Monica L. Correa Philly Fed. Existing home sales surged 4.2% to 4.26 million, beating 3.95 million, per Anuron Mitra Home Sales, offering a bright spot. Leading Indicators fell 0.3% (vs. -0.2%), per the same source, adding to growth worries.

Corporate Earnings: Disappointments Drive Sentiment

Earnings season hit hard, with FedEx missing ($4.51 vs. $4.63) and cutting FY25 EPS to $18-$18.60, per Amy Thielen FedEx Earnings. Nike’s -5.5% drop on weak Q4 guidance, per Kim Bhasin Nike Sales, cited tariffs. Lennar’s -4% slide on Q1 miss and Q2 cut, per the closing summary Lennar Earnings, and Micron’s -8% sell-off on recovery doubts, per the spotlight comment Micron Sell-Off, underscored consumer weakness. Nucor and U.S. Steel’s Q1 warnings added pressure, per the closing summary Materials Sector.

Market Sentiment and Investor Behavior: Diversification Surge

Investors are fleeing US equities, with BofA’s survey showing record cuts (-23% underweight), per Rita Nazareth BofA Survey. Diversification’s winning, per Lu Wang Diversification Wins—gold up 15% YTD, Treasuries +3%, and RPAR ETF +5% vs. S&P’s -3.6% YTD. Late mega-cap surges (Apple +2%, Tesla +5.3%) masked broader weakness, per the closing summary Mega-Cap Surge.

Geopolitical and Policy Developments: Tariff Tension Mounts

The Fed held rates steady, per Monica L. Correa Fed Holds, but Powell’s “transitory” tariff call faded—April 2 looms, per Rita Nazareth Tariff Loom. Trump’s mineral order and NGAD jet decision (Boeing wins, per the closing summary NGAD Winner) added noise. ECB’s Lagarde warned of 0.3% euro growth hit, per the morning briefing ECB Warning, and quad witching’s $4.5T expiry, per Anuron Mitra Options Expiry, stoked volatility.

Sector Performance: Mega-Caps Mask Weakness

Communication services (+1.0%), consumer discretionary (+0.6%), and technology (+0.5%) led, per the closing summary Sector Leaders, driven by Apple, Tesla, and Meta. Materials (-1.0%), industrials (-0.9%), and real estate (-1.0%) lagged, per the same source, with Nucor and Lennar hits. Equal-weighted S&P 500’s -0.5% vs. cap-weighted +0.1% shows mega-cap skew, per the closing summary Equal-Weighted Lag.

Weekly Takeaway: Volatility and Uncertainty Reign

The week was marked by continued market volatility, with the S&P 500 experiencing its fifth consecutive week of declines, albeit with a slight 0.5% gain. Corporate earnings were a significant driver of market sentiment, with disappointing results from major companies like FedEx, Nike, Lennar, and Micron highlighting ongoing economic challenges. Investors are increasingly turning to diversification strategies to navigate the uncertainty, with assets like gold, corporate debt, and Treasury bonds seeing renewed interest.

The Federal Reserve’s decision to hold interest rates steady provided some relief, but the central bank’s indication that it prefers to continue the current pace of balance sheet reduction suggests that monetary policy remains tight. Geopolitical tensions and trade war developments, particularly the upcoming tariff announcement on April 2, remain a significant concern, with quad witching adding to the volatility.

Looking Ahead: Key Events to Watch

April 2 Tariff Announcement: The U.S. is set to unveil reciprocal tariffs, which could further roil markets.
Federal Reserve’s Next Meeting: Investors will be watching for any shifts in monetary policy or guidance on balance sheet reduction.
Corporate Earnings Season: More companies will report results in the coming weeks, providing further insight into the health of the economy.

Stay tuned for more updates, and as always, stay sharp, PSW crew!

(Z3)

Key Citations

Warren 2.0’s Macro & Market Cheat Sheet

Key Macro Themes

Theme	Insight / Market Impact
Tariffs / Trade War	U.S. – China, EU, Mexico escalation risk remains high. Commodities, industrials, materials most exposed.
Big Tech Earnings Drag	Magnificent 7 correction driving 50%+ of S&P 500 weakness. Watch for further guidance downgrades.
Diversification Revival	Treasuries, gold, multi-asset ETFs, and 60/40 portfolios outperforming — shift away from pure equities.
Treasury Yield Curve	10-year yield 4.21%, softening growth expectations. 2-year yield drifting lower, supporting rate cuts.
Volatility Elevated	VIX closed just below 20 — market remains sensitive to earnings, tariffs, and Fed guidance.
Oil Demand Warnings	Crude hovering at ~$68 — a breakdown below $66.50 signals global demand concern.
Housing / Construction	Lennar miss + weak guidance confirm early cracks in housing strength narrative.

Big Tech / Magnificent 7 Check

Ticker	Status	Risk / Catalyst
AAPL	Bounced +2% Fri	AI leadership shakeup / China exposure
MSFT	Strong	Cloud / AI resilience but watch Q2 guidance
NVDA	Holding gains	AI still a tailwind, but watch Samsung’s HBM threat (Micron)
TSLA	Oversold bounce	-50% in 3 months, rally Friday. Major risk from tariffs, China demand
AMZN	Modest gain	Cloud strength / Retail headwinds due to consumer weakness
META	Strong	Outperforming on cost cuts / ad rebound
GOOGL	Lagging	AI expectations priced in; weaker search ad growth potential

Outlook: Big Tech is the battlefield — index moves now highly dependent on this group. Watch for Q2 pre-announcements.

Bond & Rate Watch

Metric	Current Level	Signal
10-Yr Treasury Yield	4.21%	Sliding lower — markets pricing slower growth / possible cuts
2-Yr Treasury Yield	3.94%	Yield curve un-inverting — shift toward recession expectations
Fed Rate Cut Odds	2 cuts in 2025 priced	Risk if inflation remains sticky, but “higher for longer” narrative is softening

Commodities Snapshot

Asset	Level	Risk/Opportunity Notes
Oil (WTI)	$68.02	Testing critical demand support ($66.50 zone). Watch for break on weak global growth.
Gold	$3,022	Strong safe-haven flows. Stay bullish on geopolitical/tariff risk.
Copper	$5.11	Stable — China weakness a concern, but industrial demand stabilizing
Nat Gas	$3.98	Rangebound; mild weather impact

Sector Risk Radar

Strong / Opportunities	Weak / Caution
Communication Services	Industrials / Materials — tariff fallout
Consumer Discretionary	Real Estate / Housing — rates bite
Technology (Selective)	Financials — layoffs, weak loan growth
Energy Short-term	Retail / Staples — weak consumer

Next Week’s Macro Calendar Highlights

Date	Event	Market Impact Potential
Mon 3/24	Flash PMI Manufacturing / Services	First look at Q2 economic activity
Tue 3/25	Consumer Confidence / New Home Sales	Housing, consumer health check
Wed 3/26	Durable Goods / Chewy, Petco Earnings	Spending / Retail consumer sentiment
Thu 3/27	GDP Final Q4 / Pending Home Sales	Backward look but headline risk
Fri 3/28	Core PCE Inflation / Michigan Sentiment	The real Fed trigger — huge risk day

Warren’s Takeaways — Strategy Map

Stay diversified — This is no longer a pure S&P 500 market
Overweight fixed income / quality credit / gold short-term
Tactical trades:

Short weak consumer names (Nike, Lennar, materials)
Long selective mega-cap tech — but trail stops
Monitor oil / copper — further breakdown signals global growth cracks
Watch Friday’s PCE — surprise CPI-like jump will spook markets hard

Target Levels / Lines in the Sand

S&P 500 Support	5,600 (critical) / 5,550 (breakdown)
S&P 500 Resistance	5,700 (heavy) / 5,748 (200-day MA)
Nasdaq Risk Zone	17,500 — below = Tech-led dump risk
10-yr Bond Yield	4.00% = full growth scare if broken
Oil Key Level	$66.50 — macro “scream” if broken