The stock market experienced another volatile week, reflecting shifting investor sentiment, mixed economic data, and new tariff announcements. Tariff headlines remain front and center, as Trump announced new rates on autos. Most of these tariffs will take effect on April 2nd. Along with tariffs, inflation numbers have been in the spotlight as new data has come out this week. In other news, the Magnificent Seven continued their downward trend this week, with Google and Alphabet leading the charge.
The well-known German economist Karl Otto Pohl once said, “Inflation is like toothpaste. Once it’s out, you can hardly get it back in again.” Luckily for investors, the United States Federal Reserve has more resources to combat inflation than the analogy suggests. The Federal Reserve’s preferred inflation measure, the core PCE (Personal Consumption Expenditures), grew higher than expected, coming in at 2.8% in February. This figure is slightly higher than estimates and has increased by 0.4% month-over-month, the largest increase since January 2024. Another market driver this week was tariffs. Tariffs currently remain a strong driver of the stock market right now, as President Trump announced a 25% tariff on autos made outside of the U.S., effective April 2nd. These new tariffs have caused negative sentiment amongst auto companies such as GM and Ford but have not disturbed Tesla as much.
The magnificent seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) greatly contributed to the overall stock market growth in 2024, however, the decline in 2025 has continued this week. Broadly speaking, these companies had forecasted moderate to good growth in 2025, and we expect them to meet these estimates. Dollar Tree had a very strong week after it announced its plans to sell Family Dollar for $1 billion to two private equity firms. The move to sell comes from its decision to return to its goal of competing with low-price retailers such as Amazon and Walmart. Other brick-and-mortar stores – such as Macy’s, Nordstrom, and Kohl’s – have also had difficulties competing with the likes of Amazon. Macy’s has recently announced its plans to close 66 unprofitable stores this year, while Kohl’s plan to close roughly 30 stores this month. In brighter corporate news and for stuffed animal lovers, Build-A-Bear Workshop reported record quarterly results earlier this month and plans to open 50 new locations in 2025. Its strategy of diversifying supply chains is allowing the company to more easily maneuver around tariffs and keep “furry friends” at a fair price for consumers.
According to new data from the University of Michigan that came out today, consumer sentiment has turned sour and has reached the lowest level since November 2022. This sentiment seems to be due to consumer views on the labor market and the expectation of a rise in unemployment. In more positive news, fourth-quarter GDP growth came in slightly above expectations at 2.4%. Weekly jobless claims also came in slightly better than expected at 224,000.
In closing, for sports fans and bracket enthusiasts, late March is typically a time of extreme frustration and disappointment. However, this year’s March “Madness” has been a time of delight and a feeling of accomplishment for most fans. The 2025 NCAA tournament so far has been marked by very few upsets, with four No. 1 seeds, three No. 2 seeds, two No. 3 seeds, and three No. 4 seeds having made it to the Sweet 16. The trade-off with a more predictable tournament has been a lack of upsets and exciting games to watch. This was until last night, when Alabama made history by setting an NCAA tournament record for the most 3-pointers made in a game (25). With a 113-88 victory over BYU, the Crimson Tide now faces a challenging opponent this Saturday night: a No. 1 seed, Duke Blue Devils. Along with Duke, the three other No. 1 seeds show no signs of weakness yet. The only year in the history of March Madness where all four No. 1 seeds made it to the Final Four was in 2008, and this may be the year for this to happen again.
Ryan Motsinger
