1. Uneven Market Performance
The S&P 500 and the NASDAQ declined for the second consecutive week as renewed tariff concerns and a tech sector pullback weighed on sentiment. The NASDAQ dropped approximately 3.5% for the week, while the S&P 500 fell 1.0%. Meanwhile, the Dow bucked the trend, rising 1.0%.
Key Takeaway: Market volatility continues, with technology stocks facing pressure while the Dow shows relative strength.
2. Bond Yields Drop
U.S. government bond yields hit their lowest levels in nearly three months, reflecting investor concerns over economic data. The 10-year U.S. Treasury yield closed around 4.19%, down from 4.42% the prior week and a peak of 4.80% in mid-January.
Key Takeaway: Falling yields suggest increasing caution among investors amid economic uncertainty.
3. February Reversal
After a strong start to the year, February ended on a weaker note for equities. The NASDAQ fell about 4.0% for the month, while the S&P 500 and the Dow lost 1.4% and 1.6%, respectively.
Key Takeaway: A sharp late-month pullback reversed early-year optimism, particularly in the tech-heavy NASDAQ.
4. Bitcoin’s Slump
Bitcoin’s sharp February decline worsened in the final week of the month. The cryptocurrency traded around $84,500 on Friday, down about 12% for the week and 18% for the month. At the end of January, Bitcoin was above $102,000.
Key Takeaway: Bitcoin faces increased volatility, with recent losses erasing early-year gains.
5. Strong Corporate Earnings
S&P 500 companies posted an average earnings gain of 17.8% compared to the same quarter last year, the strongest growth since Q4 2021. The financial sector led with a 56.0% earnings increase.
Key Takeaway: Corporate earnings continue to exceed expectations, providing a key support for equity markets.
6. Consumer Confidence Drops
The U.S. Consumer Confidence Index posted its largest monthly decline in three and a half years, dropping from 105.0 in January to 98.3 in February. Inflation concerns were the primary factor behind the decline.
Key Takeaway: Lower consumer confidence could weigh on spending and economic growth in the months ahead.
7. Inflation Remains Stubborn
The Personal Consumption Expenditures (PCE) Index showed inflation at an annual rate of 2.5% in January, slightly lower than December’s 2.6% but still above the Federal Reserve’s 2.0% target.
Key Takeaway: Inflation remains elevated, potentially delaying interest rate cuts from the Fed.
8. Labor Market in Focus
The upcoming jobs report will reveal whether January’s hiring slowdown continued into February. January’s report showed job creation of 143,000, down from 307,000 in December. However, the unemployment rate fell from 4.1% to 4.0%.
Key Takeaway: The labor market remains resilient despite signs of slowing job growth.
Next week, investors will focus on the latest jobs report and additional inflation data to gauge the economic outlook.
