March 17, 2025

Well, well, well – will miracles never end, as U.S. stocks rallied to their best day in months on Friday as the current roller coaster suddenly shot back upward, but that still was not enough to keep the U.S. market from a fourth straight losing week, its longest such streak since August.

‍

The Dow Jones rose by 674 points to 41,488 while the S&P jumped by 2.1% after closing more than 10% below its record for its first “correction” since 2023. The last time the index shot up that much was the day after the current President’s election when investors were focusing on the upsides of his return to the White House.

‍

The beaten-down Nasdaq did the best with a gain of 451 up to 17,754 as for once in a long time, the large technology stocks finally got it together after the Mag 7 issues showed some life after all of them had entered into bear market territory with declines in excess of 20% or more.

‍

Even the really beaten-down Russell 2000 Index of small stocks showed some life with a 50 point advance to 2044 while the VIX got tumbled down to 21.77 after resistance at the 30 level seems to have held.

‍

What had helped sentiment at least for one day was the Senate making moves to prevent a possible partial shutdown of the U.S. government.

Still, the heaviest uncertainty remains with Trump’s escalating trade war as the question is how much pain will allow the economy to endure through tariffs and other policies in order to reshape the country and world as he wants. The president has said he wants manufacturing jobs back in the United States, along with a smaller U.S. government workforce and other fundamental changes.

‍

While stock prices may be close to finishing their reset to account for tariffs set to hit in April, concerns about how big an impact cutbacks in federal spending will have on the economy are likely to remain for some time.

‍

U.S. households and businesses have already reported drops in confidence because of all the uncertainties created by Trump’s barrage of on again, off again tariff announcements and other policies. That has raised fears about a pullback in spending that could drain energy from the economy.

‍

Worries look to be only worsening among U.S. households, according to a preliminary survey released Friday by the University of Michigan. Its measure of consumer sentiment sank for a third straight month, mostly because of concerns about the future rather than complaints about the present as it fell to 57.9 from 63.2, which was the lowest since November 2022 despite the job market overall economy still looking relatively solid at the moment.

‍

“Many consumers cited the high level of uncertainty around policy and other economic factors,” director of the survey, and “frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences.”

‍

Such fears have investors focused on whether companies are seeing the souring mood of consumers translating into real pain for their businesses.

‍

ULTA jumped by 14% after the beauty products retailer reported a stronger profit for the latest quarter than analysts expected.

‍

The company’s forecasts for upcoming revenue and profit fell short of analysts’ targets, but they said that it wanted to be cautious “as we navigate ongoing consumer uncertainty.” Analysts said the forecasts appeared better than they feared.

‍

Gains for Big Tech stocks and companies in the artificial-intelligence industry also helped support the market. Such stocks have been under the most pressure in the recent sell-off after critics said their prices shot too high in the frenzy around AI.

‍

Stocks jumped 2.1% in Hong Kong and 1.8% in Shanghai after China’s National Financial Regulatory Administration issued a notice ordering financial institutions to help develop consumer finance and encourage use of credit cards, do more to aid borrowers who run into trouble and be more transparent in their lending practices.

‍

Economists say China needs consumers to spend more to get the economy out of its doldrums, although most have advocated broader, more fundamental reforms.

‍

In the bond market, Treasury yields rose to recover some of their sharp recent losses. The yield on the 10-year Treasury climbed to 4.31% from 4.27% late Thursday and from 4.16% at the start of last week.

‍

Yields have been swinging since January, when the 10-year yield was approaching 4.80%. When worries worsen about the U.S. economy’s strength, yields have fallen. When those worries lessen, or when concerns about inflation rise, yields have climbed.

‍

Unfortunately after Friday’s rally, things are going to start out lower today as markets are negatively reacting to Treasury Secretary’s comments that he is not worried about the recent slump in stocks because “corrections are healthy” and he also said that there are no guarantees that the U.S. will avoid a recession.

‍

Earnings this week include: Wednesday – FIVE, GSI, JLL; Thursday – DRI, FDS, FDX, JBL, LEN, NKE, MU.

‍

Economic reports will see: today – February retail sales were up by 0.2% and ex-autos and gas gained 0.5%, March Empire N.Y. State Manufacturing Survey fell to -20; Tuesday – February housing starts; Wednesday – F.O.M.C interest rate decision at which they are expected to keep the rate at 4.25% to 4.5%. They will announce their latest update for Summary of Economic Projections which will be either two or now investors are looking for the possibility of three due to the current uncertainty going on in the markets; Thursday – weekly jobless claims and February L.E.I.