3/10/25 Weekly Market Commentary
What happened last week…?????????
The 25% tariffs on Mexico and Canada, as well as the additional 10% tariff on China, went into effect on Tuesday. In response, Mexico, Canada, and China announced plans to put retaliatory tariffs on the United States. On Wednesday, President Donald Trump said that vehicles from Mexico and Canada that comply with the USMCA rules would have an exemption from tariffs one month. On Thursday, that exemption was extended to Mexican and Canadian goods covered by the USMCA. According to a White House official, about 50% of imports from Mexico and about 38% of imports from Canada would be covered under the exemption. As for the stock market’s reaction to the news of the week, weekly performances for the three major indices were as follows: DJIA (-2.37%), S&P 500 (-3.10%), NASDAQ (-3.45%).
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The ADP employment change missed expectations (148,000) as it decreased to 77,000 from the upwardly revised 186,000 (from 183,000). It is the lowest reading since July 2024 (36,000). The unemployment rate landed higher than expectations (4.0%) as it increased to 4.1% from 4.0%. Nonfarm payrolls missed expectations (170,000) but increased to 151,000 from the downwardly revised 125,000 (from 143,000). Average hourly earnings month-over-month matched expectations as it decreased to 0.3% from the downwardly revised 0.4% (from 0.5%).
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The manufacturing PMI for February landed below expectations (50.5) as it decreased to 50.3 from 50.9, marking back-to-back expansionary readings after 26 consecutive months in contraction (below 50). The non-manufacturing PMI for February beat expectations (52.6) as it increased to 53.5 from 52.8, which marks eight straight months of expansion. The figure has expanded in 54 of the previous 57 months.
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According to FactSet, as of March 7, for Q4 2024, more than 97% of S&P 500 companies have reported earnings with 76% having a positive EPS surprise and 63% having a positive revenue surprise. The blended earnings growth for the S&P 500 is 18.3%, which would be the highest growth for the index since Q4 2021. The blended revenue growth for the index is 5.3%, which would be the 17th straight quarter of growth.
Happening this week…
On Wednesday, the inflation rate year-over-year for February is expected to decrease to 2.9% from 3.0%, which marked four consecutive months of increases and the highest reading since June 2024 (3.0%). The rate peaked at 9.1% in June 2022. Meanwhile, the core inflation rate year-over-year for February is expected to decrease to 3.2% from 3.3%, a level the metric has not surpassed since May 2024 (3.4%).
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