April 2, 2025: Feeding from the Sentiment Trough?
Domestic equities spent most of the prior week flattish, with all three major US indexes rising in trading Monday before slowly ceding gains in the back half of last week, particularly pronounced on Friday. Over the course of the week, the Dow 30 shed -0.96%, while the S&P 500 fell -1.52% and the Nasdaq Composite -2.59%. The MSCI EAFE Index returned -0.97% in the period, marking a ten-week streak of outperformance relative to the S&P 500. The VIX, which hit a monthly high close of 27.86 on March 10th, found its monthly low on Tuesday closing at 17.15, before rising in the Thursday and Friday sessions to end the week at 21.65. The Treasury yield curve steepened, with likely FOMC cuts in the back half of 2025 reducing yields on the front end, while tariff and fiscal concerns pushed longer maturity yields higher. Next week brings the bellwether March ISM Manufacturing & New Orders releases (key leading economic indicators) on Tuesday, the US Administration announcing details on reciprocal tariffs Wednesday, and the official March employment report Friday. As quarter one comes to a close, here’s hoping quarter two brings some welcome news on the tariff front.
Index Data & Market Performance
What We Are Watching
Economic Data last week was largely underwhelming, with a slightly hotter-than-expected core inflation reading Friday and the two dreary sentiment prints. Also worth noting was decidedly hawkish Fedspeak from FOMC members (on the heels of dovish-leaning comments from Fed Chair Powell the week prior), with multiple voices sounding alarms about inflation expectations and a potential slower pace of rate cuts. The week ahead sees bellwether readings from March ISM Manufacturing & New Orders on Tuesday and the official employment report Friday. Wednesday afternoon will bring more details announced around US reciprocal tariffs, though the options market is currently pricing in as much risk on the employment data (4.4) than on any tariff deadline fallout.
The following economic data is slated for release in the week ahead:
3.31 Monday: March MNI Chicago PMI (Actual: 47.6; Estimate: 45.0)
4.1 Tuesday: March Final S&P US Manufacturing PMI; February Construction Spending; March ISM Manufacturing; February JOLTS Report
4.2 Wednesday: March ADP Employment Change (Estimate: 120K): February Factory & Durable Goods Orders
4.3 Thursday: Weekly Jobless Claims; March ISM Services
4.4 Friday: March Change in Nonfarm Payrolls (Estimate: 133K); March Unemployment Rate & Hourly Wages
