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A Cautious Half-Clap
After four straight weeks of flogging, US equities finally managed to locate the elusive up button. The S&P 500, Nasdaq, and Russell 2000 all booked gains for the week, ending mostly higher Friday and finishing near their session peaks, though “peaks” may be overstating it. More like standing atop speed bumps.
Still, fund flow data showed the biggest weekly inflow to American stocks so far this year, and in 2025, you take what you can get.
Level Change 3/21/25 (%)
– – – – – – – – – – – – – – –
+0.1 Dow
+0.5 Nasdaq
+0.4 Nasdaq 100
+0.1 S&P 500
-0.5 S&P 400
-0.6 S&P 600
The day began in a hole before a gentle clawback into the close. This modest rally arrived despite an absence of meaningful headlines, save for a round of lackluster earnings. Wall Street took the cue to worry about a potential uptick in negative preannouncements ahead of Q1 earnings season.
The looming April 2 reciprocal tariff announcement continues to hang over sentiment like a guitar-toting manager who opens meetings by playing “Wonderwall.” However, President Trump said there might be wiggle room in the forthcoming reciprocal remix. This ignited hopes of a negotiated settlement or at least a delay in the next round of mutually assured economic discomfort.
Some notable corporate reports.
FedEx (FDX -6.5%) reported a mixed fiscal Q3, highlighting a challenging macro environment. It lowered fiscal-year guidance more than expected on the back of continued weakness and uncertainty in the US industrial economy, “which is constraining demand” for the company’s business-to-business services.
Home builder Lennar (LEN -4%) beat earnings consensus but said a need for more sales incentives than usual depressed gross margins, and it expects this to continue. Its commentary highlighted the tough macro environment and weak housing market. Co-CEO Stuart Miller said on the call that previously upbeat consumers are now anxious. Confusion and “wavering … confidence have challenged the consumer’s desire and ability to transact.”
With sentiment looking about as bearish as it gets in the home-building sector, and valuations compelling, analysts note an appealing risk/reward picture. Shares of LEN are down 28% over the past year.
Elon Musk urged Tesla employees to HODL despite TSLA (+5.3%) stock getting sliced in half since December. He promised a dazzling future.
On the monetary front, Fed officials kept things murky. Chicago’s Austan Goolsbee warned of rising “anxiety” and a capital expenditure timeout. New York’s John Williams, vacationing — er, speaking — in the Bahamas, insisted inflation expectations remain “well-anchored,” presumably somewhere off Nassau.
— Jason Kelly
It’s almost time for the Sunday morning Kelly Letter, ahead of our quarterly signals next week. It would be a pleasure to welcome you at this opportune time. For the particulars, visit jasonkelly.com.
