Markets
Stocks fell last week as concerns about sticky inflation and the pace of economic growth rattled investors.
The Standard & Poor’s 500 Index declined 1.66 percent, while the Nasdaq Composite Index dropped 2.51 percent. The Dow Jones Industrial Average also fell 2.51 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, was essentially flat (+0.04 percent).1,2
S&P 500 Hits New High, and then ‘belly flops’
Following the Presidents’ Day holiday, stock prices were largely range-bound on Tuesday despite some intraday volatility. Then stocks edged higher, shaking off some new tariff talk and disappointing housing starts data. The S&P 500 marked its third record close of the year on Wednesday.3,4
On Thursday, stocks were under pressure from the start of trading after a weaker-than-expected outlook from a mega-retailer. The update reinforced some concerns that the economy may be slowing. The selling accelerated on Friday after a consumer sentiment survey showed investors are unsettled about the inflation outlook.
Friday’s decline was the worst of the young year.5
Economic Uncertainties
Investors were forced to navigate a week of disappointing news about the economy and inflation.
First, traders were surprised to hear about slowing demand at the country’s biggest retailer, which soured the outlook for the consumer and the economy. Then, the University of Michigan Consumer Confidence survey fell by 10 percent in February as consumers expressed concerns about higher inflation ahead of possible new tariffs.6
This combination prompted investors to move into a “risk-off” position before the weekend.
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