Market Update | March 10th - March 14th

The What

To put it simply, the stock market had another tough week! The S&P 500 fell into what's called "correction territory," which happens when it drops between 10% and 20% from its recent highest point. In just the past three weeks, it has dropped more than 10%. This week, it lost around 2.2% in total. It wasn't all bad though, as on Friday, the index added 2.1%, and while it wasn't enough to end the week in the green, it could be a sign of good to come. Other indexes saw similar trends, with the the Nasdaq dropping 2.4%, and the Dow losing 3%. Both indexes also saw a similar boom on Friday. It wasn’t the best week, but it's good that the markets showed some improvement.

Moving on to commodities, the price of gold actually increased by about 4%, briefly touching $3,000 an ounce on Friday before dipping back under. Oil prices rose slightly, at around 1.7%.

Crypto trends were more in line with equities, as the price of Bitcoin fell pretty heavily. Other popular cryptos followed similar trends.

The Why

There were 3 main things driving the sour market trends this week:

1. Consumer Anxiety
   

Consumer spending drives market growth. That's why you see so much positive reaction when the Fed cuts rates, because it causes more money to circulate in the economy. Unfortunately, the opposite is also true. When people think there will be less money circulating, performance dips. When a survey from the University of Michigan showed that people are feeling more worried about money than they have since late 2022, we saw some serious decline. More people now believe prices will stay high and that jobs might be harder to find, making them spend less. Remember, when people spend less, businesses don’t make as much money, which can hurt the stock market.

2. More Uncertainty in the News

There’s been a lot of back-and-forth in Washington over a new government funding bill, which could lead to a partial shutdown. At the same time, there’s talk about new tariffs, which as I'm sure you know by now, have not been adored by investors. Uncertainty makes investors nervous because they don’t know what will happen next, so they sell stocks just in case things get worse.

3. Inflation is Cooling Off… But It’s Complicated

Inflation (how much prices rise over time) has been a big problem lately, but the latest reports show it's starting to slow down. In February, inflation (excluding things like food and gas, which can be unpredictable) rose 3.1% compared to last year, which is lower than January’s 3.3%. Normally, this would be good news, but some investors worry that even though inflation is slowing, it's still too high for the Federal Reserve (the group that helps control the economy) to start lowering interest rates soon. For example, it is the general consensus that the Fed will not be cutting rates at their meeting this Wednesday.

What's Next

Unfortunately, with the continuation of tariff talk and the general anxiety surrounding markets, it may take a little bit of time to get back on track. In times like this, when you have doubt, it's really important to zoom out. What we mean by that is to "zoom out" by focusing on long term trends in markets instead of looking at just the past week when making investment decisions. In other words, don't panic. Understand that markets can sometimes be volatile, and understand that you're in it for the long run.

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Comment down below what YOU think the future of the economy will look like!