What Happened Last Week
- Market Correction Signals: S&P 500 falls for a fourth week—one of the quickest corrections in 75 years—as indices finish below key technical levels.
- Tariff Policy Uncertainty: Ongoing tariff debates continue to pressure investor sentiment.
- Consumer Sentiment Plunge: Despite easing inflation, sharp drops in consumer sentiment across political lines signal rising economic caution.
What We’re Watching This Week
- Retail Sales Update: Mixed U.S. retail figures with lower prior data despite a GDP-boosting surprise.
- Fed Policy: FOMC meeting, updated economic projections, and Powell’s press conference unfolding amid rising uncertainty.
- Tech Sector & International Equities: NVIDIA GTC and a European Council meeting may impact overall equity trends.
Investment Management Team Views
The S&P 500 fell for the fourth consecutive week, marking its fifth fastest correction (≥10% drop) in 75 years. Major U.S. indices closed below their 200-day moving averages despite a Friday rebound, indicating a lack of sustained momentum. Some earlier losers—especially in the growth/AI/high-beta sector—recovered significantly in the latter half of last week. The decline in equities and yields, along with the outperformance of defensive stocks, has largely priced in a near-term economic impact from tariffs. However, until the constant back-and-forth on tariff policy stops, sentiment will be under pressure for investors and company management teams. The comprehensive trade report due on April 2nd may provide a more stable framework for trade policy, a likely driver of lower market volatility and less negativity on economic growth.
Last week’s inflation data provided welcome relief amid persistent negative trade, policy, and economic trends. Wednesday’s lower headline and core inflation figures, driven by a pullback in consumer-sensitive services like airfares, helped temper the short-term upward trend. However, Friday’s University of Michigan consumer sentiment reading was starkly poor. Democrats registered sentiment near Great Financial Crisis (GFC) levels, while Republicans and Independents also began to feel slightly worse. Despite the massive downside surprise in consumer sentiment, the positive market reaction on Friday could be seen as the market pricing in the “Trump put” strike to be nearing.
This morning’s U.S. retail sales data was mixed—previous months’ weak figures were revised lower, while GDP calculations had an upside surprise. Later in the week, the Federal Open Market Committee (FOMC) will release updated economic projections and hold Powell’s press conference amid heightened policy uncertainty. Meanwhile, NVIDIA’s GPU Technology Conference (GTC) may impact tech and semiconductor trends. A European Council meeting later in the week could reshape broader equity market trends in the context of strong European equity outperformance.
