March 17, 2025
Good morning,
Friday’s +2.13% rally on the S&P 500 Index was a welcome relief. It was typical for what we get after the S&P 500 draws down by 10% from its highs, though Friday’s bounce usually takes a week rather than a day to play out. Considering that this 10% correction was as fast or faster than any on record, Friday’s move looks normal rather than a positive outlier. Surprisingly, Friday’s rally did not reverse sentiment from its extreme low – a key sign of the end of a correction or at least a pause did not materialize. The volatility index (VIX) remains above 20, its warning threshold. Combining those two points, I suspect we have a few more days on the roller coaster, provided the coaster stays on its tracks. As mentioned in Friday’s MN, the fundamental market evidence suggests it will.
This morning will offer some insight into whether the weakest consumer confidence numbers (last week) since 2022 have translated into action, or lack thereof, by consumers when the retail sales for February numbers come out. I suppose a strong retail sales figure could represent tariff front-running, but the risk to the market is that it will be difficult to explain away another drop in spending after January’s weak report. That will lead us into Wednesday’s Fed meeting and a poor retail sales figure today could also make Wednesday’s Fed announcement and dot plot a little more interesting if the committee starts to think that the consumer is much more circumspect than previously expected.
Nvidia is hosting its all week GTC Conference (GPU Technology Conference) beginning today, where CEO Jensen Huang is expected to provide AI industry updates and perhaps stem the recent hemorrhaging in AI stock prices.
Be well,
Mike