There was a lot of news for market participants to digest this week thanks to tariff drama as well as the March Fed rate decision. Retail sale data was also released this week that provided fresh insight into the minds of consumers and their impact on the overall economy.
That data was released on Monday morning and found that core retail sales had increased by .3 percent over the past month. That was level with analyst expectations prior to the news going public. Overall retail sales were up .2 percent over the past month, which was much lower than the projected increase of .6 percent. It is also worth noting that core retail sales for January were revised lower to a drop of .6 percent. Overall retail sales for January were also revised downward to reflect a decrease of 1.2 percent from December.
The Empire State Manufacturing Index came in at negative 20 on Monday morning compared to an expected negative 1.9. Taken with sluggish retail sales figures, it may be easier to argue that the economy is heading toward a recession. A potential recession on the horizon played a part in the Fed’s decision to keep interest rates where they were on Wednesday afternoon.
The Fed noted that there was a lot of uncertainty about where markets were heading because of new tariff policies. President Trump has pledged to implement new tariffs on April 2, which some fear could lead to stagflation. This is because tariffs may cause higher prices, which leads to inflation.
As of Wednesday’s meeting, the Fed dot plot pointed to the growing likelihood of two rate cuts later in the year. Jerome Powell mentioned that these cuts may occur even if inflation flares up again. The Fed Funds rate is currently at a range of 4.25 percent to 4.5 percent. Therefore, two rate cuts would likely bring that down to a range of 3.75 percent to 4 percent by the end of 2025.
The S&P 500 was up just under seven points this week to close at 5,667 and snap its weekly losing streak. Over the past five trading days, the market stayed in a range between 5,604 and 5,709. The low of the week was put in place on Tuesday morning while the weekly high was put in place on Thursday morning.
Following the S&P’s lead, the Dow was also up slightly this week, closing up 248 points to finish at 41,985. This represents a gain of .6 percent for another index that had lost ground over the last several weeks. On Thursday morning, the market made its weekly high of 42,223 while it made its weekly low of 41,506 on Tuesday morning.
Finally, the Nasdaq also managed to eke out a small gain finishing up 20 points to close the week at 17,784. Unlike the other two major indexes, the Nasdaq made its weekly high on Monday afternoon after reaching 17,915. The weekly low of 17,454 was reached on Tuesday morning, and the index remained mostly range bound on Wednesday, Thursday and Friday.
In international news, Canada released its latest inflation data on Tuesday. In February, inflation rose 1.1 percent on a monthly basis and was 2.9 percent on an annualized basis. Early Wednesday morning, the Bank of Japan (BOJ) made its most recent interest rate decision. The BOJ kept rates steady at a little under .5 percent citing tariffs and slower growth around the world as reasons to avoid a rate hike.
Great Britain also opted to keep its key interest rate steady at 4.5 percent on Thursday while Switzerland issued a rate cut from .5 percent to .25 percent. Fina
The upcoming week will likely be a continuation of market uncertainty. There will also be several important scheduled news releases, highlighted by the Core PCE Price Index, the Fed’s preferred inflation gauge. It’s believed that the index will go up by .3 percent on a monthly basis.
