Market Update | February 24th - February 28th

The What?

The market was all over the place this week. One big reason was tech stocks struggling—especially AI companies. Nvidia, the LeBron James of the tech world, saw their stock plumet over 8% for the week, despite beating earnings on Wednesday. On top of that, a new report showed that people aren’t feeling too great about the economy, more people continued to file for unemployment, and the White House made new announcements about tariffs—all of which created the perfect conditions for the poor performance we saw.

As per usual, let's look at some of everyone's favorite indexes. First, the S&P 500 shed 1.2% of its value. The Nasdaq experienced loss on a larger scale, dropping 3.62%. The Dow Jones, unlike its company on this list, finished the week positive, adding 0.8%.

Next, onto commodities. The price of gold declined significantly, dipping 3.0%. Oil also took a marginal hit, dropping 0.2% (WTI Crude).

Digital assets took a beating as well, with Bitcoin dropping around 15% after briefly touching new highs earlier this year. Other cryptocurrencies followed similar trends.

The Why?

There were 3 new developments this week that were very relevant.

First, on Tuesday, a data from a survey issued by The Conference Board, a nonprofit thinktank. The survey of 36 million U.S. consumers showed a 7 point decline in consumer confidence. Consumers generally just feeling less optimistic about the economy, as shown by the Expectations Index, which dropped 9.3 points to 72.9 this month. According to Investopedia, the Expectations Index is made up of the average of the CCI components that deal with six-month outlooks for business, employment, and income. Generally, you can think of the Expectations Index like a weather forecast for the economy. Just like meteorologists predict the next six months of weather, this index predicts how people feel about the economy’s next six months—whether businesses will grow, jobs will be easy to find, and paychecks will get bigger. When the index drops too low, it’s like seeing dark storm clouds forming—it’s a warning sign that rough economic times (like a recession) might be on the way. Statistically speaking, when this number falls below 80, it’s often a warning sign that a recession could be on the way. On top of that, more people now believe a U.S. recession is coming soon—the chances of one happening in the next 12 months rose from 65% in January to 67% in February, according to the survey.

Then, on Thursday, data reported by the Labor Department showed a 22,000 increase in weekly jobless claims. Recently, expectations for inflation, interest rate cuts, and economic growth have been the main drivers of market trends. A rise in weekly jobless claims is important because it’s a sign that more people are losing their jobs, which can point to a weakening economy.

Last but not least… tariffs. Ever heard of them? Yeah, if you've been following Kidconomy, or pretty much anything remotely related to the economy, we're willing to bet you have. We keep talking about them because they just won’t stop causing chaos in the markets! On Thursday, U.S. President Donald Trump announced that his proposed 25% tariffs on goods from Mexico and Canada will officially take effect on Tuesday. Additionally, he’s imposing another 10% tariff on Chinese imports, citing concerns over deadly drugs still making their way into the U.S. These new tariffs on China come on top of the 10% tariff that was already put in place on February 4. The timing is also notable because it lines up with China’s annual parliamentary meetings on Wednesday, where the country is expected to reveal its main economic priorities for 2025. That means retaliatory tariffs may be on the way.

What's Next?

The monthly U.S. jobs report is due March 7th, and has huge implications for the market. As we explained, recent economic releases have been disappointing, to say the least. The monthly employment release is seen as one of the most significant data points when measuring the health of the economy, and if it's weaker than expected, further panic will likely ensue. Additionally, earnings releases from Target (TGT), Broadcom (AVGO), and Costco (COST) are scheduled for this week.

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