Asset Management Weekly Market Commentary

Market updates for the week ending March 7, 2025

Key observations

• U.S. stocks remained volatile with a downward bias amid more signs of cooling in the labor market and continued saber rattling on tariffs which weighed on investor risk appetite. Eurozone and U.K. stocks continued to benefit from concerns surrounding an economic slowdown stateside, with capital flowing out of the U.S. appearing to find a home across the pond. Accommodative monetary policies and the prospect of stepped-up fiscal support in the euro area are reasons to believe relative outperformance can persist.
• The S&P 500 bounced off its 200-day moving average at 5,730 on multiple occasions throughout the week and, encouragingly, closed above this closely watched level on Friday. The S&P 500 last closed below its 200-day moving average in October of 2023, and a weekly close under this key support level could turn support into resistance and usher in additional selling.
• The U.S. Dollar fell sharply versus the euro, British pound, and Japanese yen last week as U.S. tariffs on Canada, China, and Mexico went into effect, while Germany and the European Union expressed a willingness to step up military spending in defense of Ukraine. Increased fiscal spending could generate upside surprises to euro area economic growth in the coming quarters, and with the U.S. economy slowing while Europe is potentially poised to grow faster than previously expected or feared, the euro could remain strong versus the greenback as capital is attracted to higher yielding currencies.

What we're watching

• The National Federation of Independent Business (NFIB) Small Business Optimism survey for February is released Tuesday with a reading of 101.0 expected, which would be a modest drop from the 102.8 reading in January.
• The February Consumer Price Index (CPI) is released Wednesday. Headline CPI is expected to rise 0.3% month over month and 2.9% year over year, this compares to 0.5% and 3.0% readings the prior month. Core CPI, which is more closely watched by policymakers, is expected to rise 0.3% month over month and 3.2% year over year versus 0.4% and 3.3% readings in January.
• The March preliminary University of Michigan Consumer Sentiment index is released Friday with a reading of 63.9 expected versus 64.7 in February. The February UMich survey sparked concerns surrounding the health of the U.S. consumer after a sharp drop in the future expectations component of the release and an equally concerning sharp upward move in the 5-to-10-year inflation outlook. We don’t expect much improvement this month, but some stabilization in these metrics would be welcome.