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A Bounce, But No Breakout
Just when traders were about to start selling apples on street corners, the S&P 500 notched its best session since November, proving that even a deflated balloon can catch a gust.
Level Change 3/14/25 (%)
– – – – – – – – – – – – – – –
+1.7 Dow
+2.6 Nasdaq
+2.5 Nasdaq 100
+2.1 S&P 500
+2.4 S&P 400
+2.5 S&P 600
But before the bulls break out their party hats, someone should double-check the fire exits: despite today’s heroics, the S&P, Nasdaq, and Russell all logged their fourth straight week of outsized losses.
Blame goes to President Trump’s revived love affair with tariffs, which has the market fretting about reaccelerating inflation and an economy stumbling on its way to being great again. Protectionism is one of those ideas that works better in campaign speeches than in actual economic practice.
Still, there was just enough good news to keep the wolves at bay.
A conspicuous absence of fresh tariff shocks from the White House, plus a few flashes of economic optimism levitated prices. Senate Minority Leader Chuck Schumer performed an act of political gymnastics, reversing course to support the House GOP-passed spending measure to keep government lights on. Some Democrats are incensed, but traders took it as a positive.
Then there was the sudden thaw in US-Canada trade talks, as if someone turned up the thermostat in Ottawa. Newly installed Prime Minister Mark Carney reassured markets that a solution would be found. China also pitched in, with a big rally in its stocks after the National Financial Regulatory Administration pledged to boost consumption. In Germany, incoming Chancellor Friedrich Merz declared that the era of thrift is over, promising increased infrastructure and defense spending with the grand pronouncement: Germany is back! Gulps all around.
If anyone still needed proof that consumers aren’t exactly firing up the confetti cannons over economic policy, look no further than the University of Michigan’s consumer sentiment reading, which nosedived to 57.9, well below February’s 64.0. Inflation expectations crept higher, and respondents cited the ever-present cloud of policy uncertainty. “Frequent gyrations in economic policies make it very difficult for consumers to plan for the future,” said survey director Joanne Hsu.
All told, a nice bounce, but don’t mistake it for liftoff. The market remains at the mercy of Washington’s whims, and that, as investors know all too well, is a perilous place to be.
— Jason Kelly
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