US Stocks Skip a Beat on Presidents Day: Why the Bulls Took a Breather
After a Presidents Day holiday break, the markets woke up a bit sluggish. The S&P 500 hit a record on Tuesday and Wednesday, but the momentum ran out by Friday as geopolitical jitters and a list of economic cold fronts began to chill the crowd.
What’s Holdin’ Us Back?
- Trump’s Trade Talk: The former president announced costly tariffs on cars, drugs, and lumber. While the specifics are hazy, traders feared these extra trade walls might ripple through gains and slow growth.
- Walmart’s Bottom‑Line Blow: A fourth‑quarter report hinted a strong past season but a sagging outlook for 2024, rattling confidence in retail spending.
- Retail Sales Sizzle: The Commerce Department noted January’s retail sales took the steepest monthly dip in almost two years, raising nagging concerns about consumer spending.
Signs of a Cooling Economy
- Builders Who Cry: The National Association of Home Builders saw the housing‑market index tumble to 42 in February, and new construction started slower.
- Service Sector’s Punch‑ball: S&P Global’s flash Composite Purchasing Managers’ Index (PMI) slid into contraction territory, warning that cost pressures and policy uncertainty may be choking business expansion.
Europe’s Tilted‑Tuc™
Across the continent, the pan‑European STOXX Europe 600 Index hovered just above 0% (+0.26%), signaling cautious optimism amid evolving U.S. trade policies and the drive to end the Russia‑Ukraine conflict. Here’s how the biggies fared:
- Germany’s DAX: –1.00% ahead of the federal election.
- France’s CAC 40: –0.29%.
- UK’s FTSE 100: –0.84%.
- Italy’s FTSE MIB: +1.17% (cheers to Italy!).
Eurozone’s Focus
- Composite PMI: 50.2, showing a second month of expansion.
- New orders stayed thin; workforce hiring slowed.
- Germany’s output grew modestly, France sagged, while the rest of the bloc saw mild growth.
UK’s Mixed Mood
- Composite PMI dipped but still above 50.
- Private-sector employment fell at its fastest pace since late 2020, driven by higher payroll costs.
- January inflation hit 3%; services inflation climbed to 5%.
- Average wages (no bonuses) rose 5.9% in Q4; the unemployment rate remained 4.4%.
Japan’s Yen‑sized Tensions
- Equity markets slid: Nikkei 225 –0.95%, TOPIX –0.82%.
- Strong yen (≈150.4¥/US$) and ballooning 10‑year bond yields brow beat song.
- Core CPI up 3.2% YoY in January, pointing to a possible BoJ rate hike.
- GDP grew 0.7% Q4 2024, sparking speculation that BoJ may tighten policy, hitting yields at a 2009 high.
China’s Surge in Tech
- CSI 300 Index up 1.00%, Hang Seng jumped nearly 3.8%—thanks to a spike in Alibaba shares after eyes‑pleasing sales.
- President Xi’s meetings with tech leaders hint at a political pivot away from heavy regulation.
- While the property market and domestic demand remain shaky, the tech rally lifts investor vibes.
What’s Next?
Eye‑rolling for investors: The playground is still split between uncertainty in geopolitics, shifting consumer appetite, and potential policy moves that could steer the ball. The next pulse will depend on how these factors line up.
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