2025 Week 11

1. Market Volatility Intensifies: Steepest Weekly Decline Since September

Trade tensions weighed heavily on the market as the S&P 500 recorded its third consecutive weekly loss, marking a -3.1% total return—the steepest weekly decline since September 2024. The NASDAQ officially entered correction territory on Thursday, down more than 10% from its recent high, while the Dow fell 2.3%. Sharp losses in technology stocks, which had previously led the market rally, contributed significantly to the downturn. The week’s losses underscore a shifting sentiment among investors, who are recalibrating their expectations amid evolving macroeconomic conditions.

Key Takeaway: The market is experiencing heightened volatility, with concerns over trade tensions and tech stock declines driving the steepest weekly drop since last September.

2. Nasdaq Enters Correction Territory Amid Tech Sector Sell-Off

The technology-heavy NASDAQ index suffered a significant pullback last week, officially entering correction territory after falling more than 10% from its recent high. While the S&P 500 and Dow also posted notable declines, they remained just above the 10% correction threshold. The downturn was driven largely by substantial losses in major technology stocks, including members of the Magnificent Seven, with all but one of these giants experiencing year-to-date declines—Tesla being hit the hardest, down 45% from its January high.

Key Takeaway: The underperformance of large-cap growth stocks suggests a potential shift in market leadership and signals increasing investor caution regarding elevated tech valuations.

3. Trade Conflicts Drive Market Anxiety

The global trade landscape faced renewed turbulence last week as the U.S. imposed a fresh wave of 25% tariffs on most goods from Canada and Mexico while also raising tariffs on Chinese imports. In response, these countries imposed retaliatory tariffs, prompting the U.S. to temporarily suspend some duties on Canadian and Mexican goods, particularly automobiles, for one month. The uncertainty surrounding trade policy continues to add pressure to financial markets.

Key Takeaway: The escalation of trade tensions is contributing to market volatility and increasing concerns about global economic stability.

4. U.S. Job Growth Moderates as Labor Market Adjusts

February’s employment report showed the addition of 151,000 jobs, slightly below expectations but still an improvement over January’s upwardly revised 125,000. Despite the increase, the broader labor market appears to be moderating, with monthly job gains averaging 168,000 over the past year. Meanwhile, U.S. employers have announced over 221,000 job cuts year-to-date, marking the highest level of layoffs at this point in a year since 2009. Government layoffs have also surged, with over 62,500 job cuts coming from the federal sector alone.

Key Takeaway: While job growth remains positive, the labor market is showing signs of slowing down, raising concerns about economic momentum heading into Q2.

5. U.S. Dollar Weakens as Global Currencies Strengthen

The U.S. dollar faced its biggest weekly decline since November 2022, depreciating by 2.4% against a basket of major global currencies. In contrast, the euro recorded its strongest weekly gain against the dollar since 2009, following European leaders’ commitment to increased stimulus spending. The weakening dollar provided a tailwind to international equities, particularly in Europe, where the Vanguard Europe ETF ($VGK) has gained 12.7% year-to-date, significantly outperforming U.S. markets.

Key Takeaway: A declining U.S. dollar could boost international equities and U.S. exporters but may also contribute to domestic inflationary pressures.

6. Value Stocks Outperform as Growth Faces Pressure

The market’s recent shift from growth to value stocks continues to unfold in 2025. An index of U.S. large-cap growth stocks underperformed its value counterpart by a substantial margin, with the growth index falling 3.9% for the week compared to a more moderate 2.4% decline in value stocks. Notably, six out of the Magnificent Seven—aside from Meta—are down year-to-date, marking a stark contrast to their dominant performance in 2023 and 2024.

Key Takeaway: The rotation from growth to value stocks continues, signaling a possible recalibration of investor preferences away from tech-heavy portfolios.

7. European Central Bank Moves to Support Growth with Another Rate Cut

European markets saw gains on Thursday following the European Central Bank’s decision to cut interest rates for the sixth consecutive meeting. The policy move aims to counteract weakening economic activity and heightened geopolitical tensions, particularly with the ongoing trade disputes and rising defense expenditures across the continent.

Key Takeaway: The ECB’s continued rate cuts suggest an ongoing commitment to economic stimulus, which could support European equity markets in the months ahead.

8. Upcoming CPI Report Could Shape Fed Policy

Investor attention now turns to the upcoming Consumer Price Index (CPI) report, set for release on Wednesday. The latest inflation data will be crucial in determining whether January’s slightly above-forecast inflation trend extended into February. The previous CPI report showed annual core inflation at 3.3%, a figure that was slightly hotter than expected and raised concerns about the Federal Reserve’s potential policy stance in the coming months.

Key Takeaway: Higher-than-expected inflation could disrupt market expectations for rate cuts, potentially adding further pressure to both equities and bonds.

Next week, investors will closely monitor inflation data and Federal Reserve commentary for further insights into monetary policy and market direction.