Cela's Weekly Insights - March 16, 2025

After a turbulent week, markets have managed to stage a late recovery, but investor sentiment remains on edge. Stock indexes experienced significant swings, driven by concerns over trade policy, economic data, and political uncertainty. While a strong rally on Friday provided some relief, the broader trend reflects growing anxiety over tariffs, inflation, and a possible U.S. government shutdown. With uncertainty looming, all eyes are on the Federal Reserve’s upcoming meeting, which could shape the market’s next moves.

Tech’s Wild Ride and Tariff Woes

The week started on a sour note as markets suffered one of their worst sessions in months. The Dow Jones Industrial Average tumbled nearly 900 points at one point, while the Standard and Poor’s 500 saw its sharpest single-day decline since September. The hardest-hit sector? Technology. The Nasdaq Composite plunged over 4% in its worst session since 2022, as heavyweights like Nvidia, Tesla, Apple, and Alphabet saw deep losses. Tesla alone shed 15%, erasing all post-election gains, while Nvidia and other tech giants faced steep declines.

Driving the sell-off was renewed concern over a potential recession, fueled by statements from President Trump and his advisors acknowledging a possible economic slowdown. Additionally, ongoing trade tensions weighed heavily on investor confidence. Trump’s unpredictable stance on tariffs sent shockwaves through markets, particularly after he threatened to double tariffs on Canadian metals and floated potential auto tariffs that could severely impact North American trade. As Canada and the European Union responded with countermeasures, the threat of a full-scale trade war loomed large, keeping traders on high alert.

Inflation Eases, but Risks Remain

Midweek, markets saw a brief respite as fresh inflation data suggested price pressures might be cooling. The Consumer Price Index (CPI) showed a 3.1% increase in February, marking the slowest rise since April 2021. This initially boosted investor confidence, as a softer inflation print could ease pressure on the Federal Reserve to maintain its restrictive monetary policy. Tech stocks rebounded sharply, with Nvidia soaring 6% and Tesla regaining 7% after days of heavy selling.

However, relief was short-lived. The Producer Price Index (PPI) released later in the week revealed that wholesale prices remained flat instead of the expected 0.3% increase. While this provided some comfort, annualized inflation remains at 3.2%, which keeps the Fed in a tricky position. Compounding market fears, consumer sentiment data from the University of Michigan came in weaker than expected, highlighting that many Americans remain pessimistic about the economic outlook despite easing inflation pressures.

A Late Rally, but Uncertainty Lingers

Just as markets seemed to be sliding deeper into correction territory, Friday brought a much-needed bounce. The Standard and Poor’s 500 surged over 2.1%, while the Nasdaq led gains with a 2.6% jump. The Dow also rebounded strongly, adding more than 600 points. The rally was fueled by easing fears over a government shutdown, as Senate Democrats signaled they would not block a crucial funding bill. This provided markets with a temporary sense of stability, allowing investors to focus on corporate earnings and macroeconomic data.

Despite the rebound, uncertainty remains a key theme. President Trump’s firm stance on tariffs—particularly his threat to impose a 200% tariff on European wines and spirits—suggests trade tensions are far from resolved. Meanwhile, gold prices spiked above $3,000 an ounce, a sign that investors are still seeking safe-haven assets amid market turbulence.

Looking ahead, next week’s Federal Reserve meeting will be pivotal. Investors will closely watch Jerome Powell’s commentary for clues on future interest rate decisions. With markets still volatile and economic risks mounting, the next moves by policymakers could determine whether this week’s recovery has legs or if more downside is in store. Until then, traders should brace for more swings as markets digest the latest economic and political developments.

Last Week's Market Performance: A Global Overview

Markets wrapped up the week with a mixed performance, as major equity indices faced broad declines, particularly in the U.S., where the S&P 500 and Nasdaq fell over 2%, extending their losing streaks. European stocks followed suit, while the Russell 2000 struggled the most among U.S. benchmarks, down nearly 10% year-to-date. Meanwhile, gold and silver emerged as clear winners, rallying over 2% and 3% respectively, reflecting rising investor demand for safe-haven assets. Bitcoin, however, saw a sharp pullback of more than 5%, retreating from its recent highs. On the macro front, bond yields remained under pressure, and volatility surged, signaling persistent uncertainty as investors weigh economic risks and policy expectations.

Cela’s Weekly Insights Indicator

That's all for today, folks. For more insights, be sure to join me every weekday morning on my podcast, Capital Markets Quickie, where I break down the most important news and events in the markets.

Cheerio!

Endrit Cela The Investment Fella - ECB, mm, 411 ??