Weekly Market Commentary March 24, 2025

Amid the plethora of economic reports and a Federal Open Market Committee (FOMC) meeting, market indices closed the week slightly higher as markets grappled with a resilient economy and future inflation expectations.

• The S&P 500 rose by 0.51%

• The Dow Jones Industrial Average increased by 0.60%

• The tech-heavy Nasdaq rose by 0.17%

• The 10-Year Treasury yield closed at 4.25%

The FOMC decision to maintain the federal funds rate at 4.25% to 4.5% was the week’s key development, signaling a cautious approach amid economic uncertainties. The Fed acknowledged solid growth and a strong labor market but remains vigilant about persistent inflation. Their data-dependent strategy, coupled with a slowed pace of Treasury security reduction, reflects a delicate balance between maximizing employment and returning inflation to the 2% target.

Retail consumer data provided a mixed picture. Core retail sales met expectations with a 0.3% month-over-month increase, a welcome recovery from January’s revised -0.6%. Headline retail sales, while positive at 0.2% and a substantial improvement from the previous month, fell short of forecasts. Business inventories aligned with projections, growing by 0.3%. The NY Empire State Manufacturing Index, known for its volatility, offered a surprisingly bearish outlook at -20.0, which should be interpreted with caution.

February’s housing data revealed a potentially more resilient sector. Housing starts surged to 1.501 million, well above forecasts, indicating a strong rebound from January’s dip. Existing home sales also surpassed expectations, reaching 4.26 million. While building permits saw a slight decrease to 1.456 million, the overall trend suggests January’s housing slowdown may have been an anomaly, and the market could be exhibiting stronger underlying momentum.

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