(Justin Vaughn, Editor, Options Trading Report)
The week ending March 15 was yet another roller-coaster ride of peaks and valleys. After a week of drifting, sliding backwards, and then gaining, the indexes eked out small gains. Investors and traders, beleaguered by the imposing of more tariffs and retaliatory tariffs, are reacting less severely, more rationally. The week was “tariff-calm,” with the administration seemingly on ‘tariff-hold,’ with the market in quiet mode. After the Reserver held rates unchanged, trading was ’back-to-normal.’ The 10 year Treasury note yield crept up a bit to 4.25%, down slightly for the week with heavy volume.
Monday opened ‘like-a-lion,’ with the Dow Jones Jones Industrial Average catching fire, charging upward near 600 points for the day at 42583.32 while the heavy technology Nasdaq Composite added 2.27%, closing at 18188.59. The steady-eddy S&P 500 index finished up 1.76%. The Magnificent Seven and tag-alongs were all up across-the-board as President Trump showed signs of lessening up on tariff implementations…for the time being. Still, investors remained apprehensive over stubborn inflation and the long term effects of tariffs. President Trump at a press conference at Monday’s closing said, “he would give a lot of countries a break (on tariffs) if they gave the U.S. a fair shake. “Market conditions are improving dramatically as the angst around reciprocal tariffs is somewhat diminishing. Should the administration come through with a more targeted and tactical strategy around a tariff implementation, risks of a full blown trade war are reduced,” said Charlie Ripley, senior investment strategist at Allanz Investment Management.
Tuesday marked the third good market day in a row, as all three indexes were slightly higher as optimism picked up steam. Crucial Consumer Sentiment surveys however gave reason for concerns and revealed key evidence on the changing economy. The Conference Board’’s March edition released Tuesday showed consumer confidence dropped 7 points to 93.9, a larger drop than market watchers and strategists had expected. Another survey by the Conference Board, data on business, labor and market conditions revealed a severe drop to the lowest level of 65.5%, well below the threshold of 80.0%. Much of the deterioration in the confidence levels have occurred since President Trump has begun to impose tariffs. The University of Michigan Consumer Sentiment Survey, due this Friday, and headed by Joanne Hsu will give pertinent data on the direction of the economy as seen by the consumer. Also the commerce Department will release more related information on Friday regarding household spending and income, valuable numbers to chart the economy.
Wednesday’s market was… bleak, as more tariff discussion dulled the market. The market stalled as talk of 25% tariffs on ‘cars and micro-chips’ heated up. It was enough to push the market to sell-off mode, breaking a 3-day streak. All indexes suffered with the tech-heavy Nasdaq taking a 2% hit. The S&P 500 and the Dow Jones Industrial Average were down 1.1% and 0.4% respectively.
Gold was ‘front-and-center’ hovering at $3,066.30 on Thursday, showing all signs of remaining stronger, with heavy buying by a select group of Central Banks, along with notable consumer interest. Bolivia, China, have instituted buying of gold to bolster their reserves as economies demonstrate uneasiness.
RUMBLINGS ON THE STREET
Robert Dietz, Chief Economist NAHB, Barron’s – “If tariffs are significant, prices will move up, but probably just as a one-time adjustment, rather than persistent increases. Tariffs will affect inflation.”
Sarah Henry, Managing director at Logan Capital Management, WSJ – “Any respite from the tariff narrative feels like a sigh of relief for this market.”
John Williams, New York Federal Reserve President, WSJ – “The current modestly restrictive stance of monetary policy is entirely appropriate given the solid labor market and inflation still somewhat above our 2 percent goal, It also positions us well to adjust to changing circumstances that affect the achievement of our dual mandate goals.”
Thomas Simons, chief U.S. economist at Jefferies, WSJ – “The data today add evidence to the case that the economy has cooled from the torrid pace of consumer driven growth of the past 18 months. Some kind of pullback was inevitable, though soaring sentiment may lead to a steeper slowdown than we anticipate.”
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