Economy
It was a relatively slow week of economic news this week, capped by worse-than-expected news in the housing market and on US consumer confidence. On the housing front, sales fell by 4.9% last month from the previous report, while economists were expecting a decline of just 2.6%. This may not come as a big surprise as mortgage rates have remained near 7% for the three months. Homes put on the market are remaining on the market longer (41 days on average vs 36 days in January 2024), according to the National Association of Realtors. In addition, the University of Michigan's survey of consumer sentiment showed a sharp decline from last month. The report also showed that consumer's expectations for inflation rose significantly as the tariff story continues to play itself out. It is important to note the way personal politics can impact survey data. For example, while sentiment and inflation expectations worsened for Democrats and independents, it remained relatively unchanged for Republicans, so always take survey data with a big pinch of salt.
Markets
The S&P 500 traded sideways this week until Friday's session, which saw stocks drop sharply. For the week, the index closed 1.65% lower. Stocks fell Friday on a mix of poor economic reports (discussed above) and a handful of stocks that were making headlines for the wrong reasons. WalMart traded lower after it's earnings report, citing (you guessed it) expected weaker profits in the year ahead due to looming tariffs. UnitedHealth Group shares dropped after the DOJ announced an investigation into its billing practices, leading the Dow to its worst day of 2025. While we're nearly through an overall positive earnings season, you can't start to close the book on it until Nvidia reports next week. To say there's a lot riding on next Wednesday afternoon would be about right. This will be the chip maker's first earnings call since the Chinese AI Deepseek made some pretty big waves a few weeks ago. While the stock has recovered most of its losses since January 27, it's still trading about 10% off it's all-time high.
What We're Reading
- The Wild Economics Behind Ferrari’s Domination of the Luxury Car Market - WSJ
- Tune Out the Noise - Barry Ritholtz
Have a great weekend.
Dogwood Wealth Management