March 18, 2025

Would you believe it, that the market had the nerve to rally for  the second straight day, which is the first such occurrence in more than a month, but unfortunately the S&P and Nasdaq are still having their worst month since September 2023.

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The Dow was the leader with a 353 point gain to 41,841 led by gains in IBM, MCD and UNH. This is after it had declined for four straight weeks with its worst showing last week in two years.

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The S&P made a second straight gain as well after it had declined into a correction last week on the lows. It gained 36 to 5675 led by financials, energy and some technology-type names such as beaten-down AAPL, NFLX, BKNG and COST, all of which had come down sharply lately.

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The Nasdaq was the weakest one with a 54 point gain to 17,808 as NVDA, AMZN and pathetic TSLA were among the weak showers here. It also showed some resilience in that it had been more than 100 points down in the morning.

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The Russell 2000 Index of small stocks did a little better with a 24 point advance to 2068 as it also remains in correction territory as financial stocks helped here and the VIX got blasted lower for the second straight day with a close down to 20.51.

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The March N.Y. State Empire Manufacturing Survey came in at an awful -20, which might have caused some hesitation on the opening but did not seem to have had any lasting effect.

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More big swings could be ahead, with the Fed interest rate decision on Wednesday and worries continuing about the  President’s trade war and his attempts to try to bring the Ukrainian invasion to some kind of solution.

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Stocks have been mostly tumbling on worries that Trump’s announcements on tariffs and other policies are creating so much uncertainty that they will push U.S. households and businesses to freeze their spending, which would hurt the economy. Surveys have shown sharp drops in confidence and some companies are already warning about changes in behavior from their customers.

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The retail sales report saw broadly weaker revenue last month than economists expected, but it may not have been quite as bad as it seemed on the surface.

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Much of the shortfall in growth versus expectations was due to weaker-than-forecast sales of automobiles and lower fuel costs. Outside of them, the performance was closer to expectations with a gain of 0.2% and 0.5% excluding autos and gas.

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Treasury yields initially rose immediately following the report’s release. That is often an indication of firming confidence among bond investors about the strength of the U.S. economy, though yields quickly yo-yoed afterward through the day.

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It is a sharp turnaround for investors even to be talking about a possible recession after the U.S. economy closed last year at a solid rate. Excitement at the time was also building about policies coming from Trump to accelerate growth. To be sure, hiring still remains relatively healthy, and that could help keep the economy growing. But the talk about recession by itself could hurt  confidence.

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That is the precarious stage onto which Federal Reserve Chair Jerome Powell will step Wednesday, when he announces the Fed’s latest decision on interest rates.

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Virtually no one expects the Fed to make a move, as the central bank has been keeping rates steady so far this year, preferring to see how conditions play out. Earlier, heading into the end of last year, it had been cutting rates sharply in hopes of relaxing pressure on the U.S. economy after high inflation had slowed.

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The focus will be on what Powell says about the rest of the year. Expectations are still high the Fed may cut its main interest rate two or three times in 2025. The risk of cutting interest rates too quickly or aggressively is that it could push up inflation. But keeping rates too high for too long could also create unnecessary pain for the economy by slowing borrowing and overall activity.

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INTC gained again to extend its gains after the chip company named a former board member and semiconductor industry veteran  last week.

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This helped offset a 5% drop for TSLA. The electric-vehicle company’s stock has been struggling this year amid worries that its brand has become too intertwined with Elon Musk, who has been leading efforts to cut spending by the U.S. government. Its  vehicles and dealerships have become targets of people unhappy with Trump and his policies.

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In the bond market, Treasury yields were mixed. The yield on the 10-year Treasury went from 4.28% shortly before the release of the retail sales report to nearly 4.33% immediately afterward. It then pulled back to 4.29%, down from its 4.31% level late Friday.

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In stock markets abroad, indexes rose across much of Europe and Asia.

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The market in China rose after the government reported stronger than expected factory data. Later Monday, officials briefed reporters about Beijing’s efforts to get consumers to spend more as a way to getting the economy out of its doldrums.

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Stocks rose 0.8% in Hong Kong and 0.2% in Shanghai. Stock markets outside the United States have been beating the U.S. so far this year, flipping the leaderboard after years of U.S. dominance.

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

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Economic reports will see: yesterday  – 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; today – February housing starts gained 11.2%, February import prices gained 0.4% and 2% year over year, export prices gained 0.1% and 2.1% year over year, February industrial production rose 0.7% while capacity utilization came in at 768.2; 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.