Week in Review: March 28, 2025

March 31, 2025

Recap & Commentary

Markets experienced notable declines across most major indexes as the S&P 500 notched its fifth weekly decline in the past six. The tech sector faced significant losses, particularly among artificial intelligence hardware stocks and Chinese chip manufacturers, due to concerns over trade restrictions and decreased demand.

On Wednesday, the White House announced new tariffs including a 25% levy on foreign-made automobiles. The newly announced tariffs are to take effect April 3rd, but most have their eyes set to the April 2nd announcement of reciprocal tariffs. Back in February the administration announced implementing reciprocal tariffs on a country-by-country basis aiming to raise levies to match those of other countries.. Wednesday’s announcement should clear up some but not all uncertainty as most expect a bit of back and forth as the effected trade partners react and respond.

Markets were hit hard to end the week as a higher-than-expected PCE report sent markets tumbling Friday. In the week prior the Fed discussed their wait and see approach and Friday’s report all but confirmed that there is going to be a bit more waiting before investors will see additional rate cuts.

Economic Commentary

Core PCE inflation, the Fed’s preferred inflation measure, rose 0.4% in February, and 2.8% from a year ago. Both measures came in higher than expected. The stubborn inflation reading means the interest rate cuts long yearned for by investors may be further down the road.

US manufacturing activity fell for the first time this year and dropped below 50 signaling the first deterioration in manufacturing since December. Service sector activity, however, rose to a three-month high. The resulting rise in service sector output was the largest recorded so far this year, with companies reporting improved new business inflows amid some signs of strengthening customer demand and better weather compared to earlier in the year. Employment edged up in April, reversing February’s small decline, though job growth remained sluggish as firms hesitated to hire amid demand uncertainty.

New home sales saw a slight increase of 1.8% in February and up 5.1% from a year prior. Lower mortgage rates helped lift demand in February while new home inventory remains elevated. The median new home sale price in February was $414,500, down 1.5% from a year ago. Pending home sales rose 2% in February but continue to lag the previous years levels.

Durable goods orders were up modestly, unexpectedly increasing 0.9% in February. Businesses continue to rushed to avoid potential price increases from tariffs, likely boosting capital expenditure in the first quarter.

Consumer confidence fell 7.2 points in March to 92.9, the fourth straight monthly decline and its lowest reading since January of 2021.

Initial jobless claims  decreased just 1K to 224K, in line with forecasts.

Of Note

U.S. corporate profits surged to a record high in the fourth quarter amid strong demand and pricing power. Profits from current production with inventory valuation and capital consumption adjustments jumped $204.7 billion, or at a 5.4% rate, to an all-time high of $4 trillion last quarter, the Commerce Department’s Bureau of Economic Analysis (BEA) said.

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Market Indices   (As of 03/28/2025)

• March Employment Report
• ISM Manufacturing
• ISM Services
• JOLTS Job Openings
• Initial Jobless Claims