Market Data as of Week Ending: 2/21/2025 unless noted otherwise
U.S. stocks fell over the holiday-shortened week as geopolitical tensions and consumer spending concerns weighed on the markets. New tariff talks seemed to be digested well as President Trump’s auto tariff, aimed to begin on April 2nd, has been viewed more as a bargaining chip rather than a permanent feature. Growth stocks underperformed value by a significant margin as valuation concerns and profit-taking led to a slowdown in the momentum trade. The S&P 500 declined -1.63% from last Friday, while the equal-weighted S&P 500 registered a -0.7% decline for the week. Size held up slightly better as the Russell 2000 fell -3.7%. Consumer discretionary and communication services were the two worst-performing sectors, while more defensive-oriented sectors like utilities, consumer staples and healthcare were some of the best performers. Foreign developed and emerging markets were positive, lifted by a strong week from Chinese equities, and outperformed domestic equities.
Yields fell slightly as bonds responded positively to the news that Fed policymakers were prepared to hold rates steady until inflation improves. The 10-year Treasury yield ended the week five basis points lower at 4.42%, while the 2-year Treasury moved lower to 4.19%. Quality outperformed over the week as there was a minor flightto-quality trade that took place while duration was mixed. Longer-term government bonds were the best-performing segment. Investment-grade corporate bond yields fell slightly, ending the week at 5.22%, while high-yield bonds rose to 7.44%.
Economic data for the week did little to ease growing concerns. On Tuesday, the home-builder confidence index fell to a reading of 42 in February, its lowest level in five months, as concerns over mortgage rates and the impact of tariffs weighed on the industry. Housing starts in January fell 9.8% month-over-month to 1.483 million and showed no growth in starts or permits for single-family homes. The Philadelphia Fed Manufacturing Index fell from 44.3 to 18.1 in February, still above its long-run nonrecession average, as new orders and shipments fell. U.S. leading economic indicators fell by 0.3% in January as consumers’ view of future business conditions turned more pessimistic in January, which – alongside fewer weekly hours worked in manufacturing – drove the monthly decline. The S&P flash U.S. services PMI came in at a 25-month low of 49.7 in February, as uncertainty related to government policies and rising input costs drove the overall decline. University of Michigan’s Consumer Sentiment index fell to 64.7 in February, a drop of nearly 10%, as a 19% decline in buying conditions for durables contributed to the fall. Inflation expectations for the year ahead also jumped to 4.3%, up from 3.3% in January.