Investors could use some good news after this week’s selloff. Whether they get any in the week ahead remains to be seen. The past week’s slump was ugly. President Donald Trump’s tariffs on Canada, Mexico and China and rumblings of economic weakness alarmed investors who fear the market outlook has taken a turn for the worse. By Thursday’s close, the major averages were on track for the worst week of the year . At one point on Friday, the S & P 500 was seeing its largest weekly decline since June 2022 and the Dow Jones Industrial Average the biggest weekly loss since March 2023. The situation only deteriorated as the week wore on, after a barrage of tariff developments exhausted traders unsure of what to make of the back and forth. At the same time, a somewhat softer jobs report on Friday eased some concerns around the state of the labor market. Looking ahead, investors just want some clarity on their two biggest preoccupations — trade and economic growth — hoping they might spur a relief rally, and not another slide. On top of everything else, there’s the threat of a government shutdown next Friday , and it’s the last full week before the Federal Reserve’s next policy meeting starts on March 18. Few expect the recent volatility to end any time soon. “Investors are going to effectively decide — not just next week — they will ask themselves this question on and on, with each new piece of data and news, ‘Is this over, in terms of negotiations and tariffs, and what have you, or are we just beginning?'” said Giuseppe Sette, co-founder of Reflexivity. “Because in the first case, you buy the dip. In the second case, it’s a bear market.” .SPX 5D mountain S & P 500 over the past five days. As it is, on Friday the S & P 500 was looking to test whether its 200-day moving average at about 5,733 would hold. That’s a measure of whether the long-term bull trend for the broader index remains intact. At early afternoon Friday, the stock market benchmark was trading right around that level. Still, a short-term snapback could be in store if there’s any hint of optimism in the week ahead, suggesting opportunity for traders, as the details around trade policy from Washington remain fluid. “If there is just a whiff of optimism, the market can rebound,” said Sette. “If there is a bit of positive headlines, the market is going to drink that up like milk.” By midday Friday, the Nasdaq Composite was down 4% for the week, the S & P 500 lower by 3.4% and the Dow Jones Industrial Average nearly 3%. Recession enters conversation Economic data is only set to gain even more attention going forward, as investors look for what effect a potential global trade war and DOGE cuts of federal workers will have on consumer spending — and, by extension, the implications for a market that was far above historical valuation levels at the start of the year. “Everybody will be, including us … keeping our eyes open for any signs of softness in both the labor market, as well as the aggregate demand side of the market, which includes consumers and investment,” said Kevin Khang, head of global economic research at Vanguard Group. US10Y YTD mountain U.S. 10-year Treasury yield in 2025. There are already hints of weakness. The 10-year Treasury yield fell as low as about 4.1% this week, down from 4.8% earlier this year, as the Atlanta Fed GDPNow showed that the U.S. economy was on pace to contract in the first quarter . Outplacement firm Challenger, Gray & Christmas on Thursday reported layoff announcements recently jumped to their highest since 2020. Meanwhile, the Fed’s latest Beige Book suggested rising uncertainty around Trump’s policies. Few investors hold the likelihood of a recession in their base case given the strength of household balance sheets, plus the idea that government policymakers will do everythng in their power avoid one. “It’s something that the administration still has a control over,” said Vanguard’s Khang, adding, “And that’s why recession, though it’s a possibility, is not something that features in the baseline of our view.” Still, more investors are seeking protection in their portfolios. Fairlead Strategies’ Katie Stockton and Hartford Funds’ Nanette Abuhoff Jacobson say Treasurys and gold are both good places for investors to diversify their portfolios. Elsewhere, BeiChen Lin, senior investment strategist at Russell Investments, said he is not likely to recommend buying the market dip until there’s still more damage. “We’re basically seeing that other investors are worried, but they haven’t really gotten into panic, though, just yet,” Lin said. “And we want to see more signs of other investors getting panicked before we consider potentially adding incremental risk to our portfolios overall.” Wall Street’s fear gauge, the CBOE Volatility Index , this week topped 26, a level that indicates elevated volatility, but not panic. .VIX 5D mountain VIX volatility index over past five days. Inflation data February inflation data due next Wednesday may quell some fears. The consumer price index is set to have risen 2.9% on an annual basis, down from 3.0% in the prior report, according to economists polled by FactSet. Core inflation, excluding food and energy prices, is expected to have risen 3.2%, down from 3.3% previously. The February producer price index on Thursday is also expected to have eased, to 3.1% year over year, according FactSet consensus estimates. That’s down from 3.5% previously. Core inflation is expected to have fallen to 3.5% from 3.6%. But if companies start to pass along higher costs to consumers, and inflationary pressures from Trump’s tariffs eventually start to show up in those data series, that could add to the market’s woes. Already, there are some signs of retailers raising their prices to match their own costs. “CPI and PPI is a good opportunity to see how much of that may have shown up in the actual consumption basket that would be more expansive and representative than just companies saying things,” Vanguard’s Khang said. Week ahead calendar All times ET. Monday, March 10 Tuesday, March 11 6 a.m. NFIB Small Business Index (February) 10 a.m. JOLTS Job Openings (January) Wednesday, March 12 8:30 a.m. Consumer Price Index (February) 8:30 a.m. Hourly Earnings final (February) 8:30 a.m. Average Workweek final (February) 2 p.m. Treasury Budget (February) Thursday, March 13 8:30 a.m. Continuing Jobless Claims (03/01) 8:30 a.m. Initial Claims (03/08) 8:30 a.m. Producer Price Index (February) Friday, March 14 8:30 a.m. Michigan Sentiment preliminary (March) Expiration of Congressional continuing budget resolution from December
Wall Street wants clarity on trade, growth in the coming week after latest selloff
Mar 7, 2025
