Wall Street on Friday slipped to a loss for the week, as sentiment took a hit due to weak economic data, another Federal Reserve signal that there would be no more interest rate cuts, tariff developments, and weak guidance from Walmart. Donald Trump continued to garner headlines – On Tuesday, he said he would announce 25% tariffs on imports of cars, semiconductors, and pharmaceuticals on April 2.
Coupled with tariff talk, inflation continues to be a concern. The release of the January core personal consumption expenditures (PCE) price index this week – the preferred inflation metric for the Fed could be very revealing as to the future of Fed interest rate actions. And Nvidia reports Wednesday – the most watched and owned stock would have a massive impact on the direction of the stock market.
For the week, the S&P 500 slipped 1.7%, while the Nasdaq slumped 2.5%. The Dow also shed 2.5%.
Future Wealth’s View
There has been a series of mass firings of federal employees by Trump at the Department of Housing and Urban Development, the IRS, Social Security Administration, Department of Health and Human Services, National Science Foundation and the list goes on and it’s been less than a month since Trump took office. It is fair to say that unemployment numbers will definitely inch up in the coming months.
Amidst the mass layoffs, Walmart’s cautious outlook for 2025, reflecting to some extent how one of America’s biggest retailers is taking onboard growing uncertainty about the direction of the US economy is particularly concerning. A more important fact that was largely missed by most was Walmart’s comments on its earnings call that much of its market share gains was coming from high income earners. This shift in consumer spending reflects the impact that inflation is having on wealthier consumers who largely avoided Walmart in the past but are instead choosing to shop there now.
Just last week, we had stated that “We are in a situation where the stock market could post a return of >10% in 2025 if inflation drops back or we could have a sharp correction of >10% if inflation continues to climb. We, at Future Wealth LLC, believe that it is time to take steps to protect your portfolio. You may have to give up on some gains but losing money could be more painful.”
If the PCE numbers or NVidia results disappoint, we could be in for a bloodbath this week.