The Week in Review 2/24/25

“High expectations are the key to everything.” – Sam Walton

Good Morning ,

Markets were closed last Monday for President's Day.

The S&P 500 hit a fresh record high (6,147) in first half of the week, and it looked like we were in for a very nice week.Buyers were encouraged by resilience to selling interest and the inclination to buy on any weakness, but on Wednesday that changed. The mood shifted when profit-taking activity prevailed by the end of the week. Valuation concerns fueled the sellers in some of the biggest year-to-date winners.

That induced chatter about the market possibly being at a near-term top, which in turn discouraged any new buying interest. Growth concerns were also in play following Friday's economic data.

The preliminary February S&P Global US Services PMI fell to contraction territory (i.e. below 50), the final University of Michigan Consumer Sentiment report for February dropped to 64.7, and existing home sales declined 4.9% month-over-month in January.

Disappointing fiscal Q1 and full-year guidance from Walmart also contributed to the selling interest in the latter half of the week. Some economists believe that “as goes Walmart, so goes the consumer” … and the economy. Mega cap stocks and small cap stocks saw the largest decline while the "rest" of the market held up well actually.

The market-cap weighted S&P 500 declined 1.7% from last the previous Friday; the equal-weighted S&P 500 registered a 0.7% decline this week; and the Russell 2000 fell 3.7%.

The weakness in the mega cap space led by the S&P 500 consumer discretionary (-4.3%) and communication services (-3.7%) sectors, which house mega cap components, registered the largest declines among the 11 sectors. The defensive-oriented sectors like utilities (+1.4%), consumer staples (+0.9%), and health care (+1.1%) were some of the top performers.

Market participants were digesting more talk about tariffs but took it in stride due to a view that tariffs are more of a bargaining chip than a permanent feature. President Trump said the auto tariff rate will be about 25% starting April 2, and that he is also considering tariffs for pharmaceuticals and semiconductors.

Looking ahead this week…

Have a wonderful week!

Michael D. Hilger, CEP^®
Managing Director

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