MARKET COMMENTARY

Last week brought a much-anticipated Federal Reserve (Fed) meeting and monthly retail sales data, meaning there is a lot to discuss as we head into a new week. Read on for a summary of what you should know.

Weekly Stock Index Performance

For the week ending 03/21/25, the S&P 500 snapped its four-week losing streak. Overall:

• The S&P 500 increased by 0.51%. 
• The Nasdaq 100 traded higher by 0.25%.
• The Dow Jones Industrial Average added 1.20%.

Fed Meeting & Outlook

• As expected, the Fed left interest rates unchanged at the March policy meeting last week. The Fed sees two rate cuts to come in 2025 despite a more uncertain outlook for the economy.
• Noteworthy developments included the Fed reducing its 2025 economic growth rate forecast and raising its inflation projection. The Fed•s tone was one of a •wait and see• approach amid tariff and other uncertainties • but with rate cuts in the back pocket later in the year.

Retail Sales Mixed

• Retail sales for February showed a mixed picture, with spending increasing by 0.2% in February (better than the revised decline of 1.2% in January). Consumer apprehension has been a theme in recent consumer-centric readings. 
• While the retail sales reading came up short of Dow Jones expectations for a 0.6% rise, major U.S. stock indexes were higher after the data release. That resilient consumer we have gotten to know and love over the years seems to be in hibernation lately.

Stock Buybacks Rise

• According to data compiled by S&P Dow Jones Indices, S&P 500 company share buybacks (when a company buys back its own stock) rose by 7.4% quarter-over-quarter in Q4 2024. NVIDIA, Apple, and Alphabet were among the top five companies in share buybacks within the S&P 500 during Q4 2024.
• The trend appears to have continued into Q1 2025, with many companies loading up on stock at recent lower prices for employee options and ahead of the lingering uncertainties currently in play. The net result could create a positive impact on Q1 2025 earnings per share (EPS), according to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

The Week Ahead

• This week, we will get Gross Domestic Product (GDP) data on Thursday, and the Fed•s preferred metric on inflation, Core Personal Consumption Expenditures (Core PCE) will be released on Friday morning. Speaking of personal consumption, those pesky egg prices have seemed to come down in recent days!
• Recent inflation data showed some signs of cooling, which raises an important consideration. While tariffs have seemed to dampen economic expectations quickly, it remains to be seen whether this will further contribute to a decline in inflation metrics in the future. Keep in mind that tariffs are expected to lead to higher prices.