Bulls, bears stare each other down

02/24/25
  • S&P 500 sets another record, but declines for week
  • Energy extends bounce, small-cap index negative for year
  • This week: Fed inflation, GDP, NVIDIA and retail earnings

The US stock market continued its recent pattern of tip-toeing around record levels—testing its highs, but failing to find the momentum to push significantly past them.

Despite hitting another record high last Wednesday, the S&P 500 (SPX) lost ground for the week amid ongoing concerns about inflation, tariffs, and the resiliency of the US consumer. The SPX is coming off its 11th week of trading less than 1% above its December 6 high:

Chart 1: S&P 500 (SPX), 1/13/25–2/21/25. S&P 500 (SPX) price chart. Another pullback from highs.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)


The headline: Stock market at home on the (trading) range.

The fine print: Last Wednesday, the minutes of the Fed’s January 28-29 policy meeting showed board members discussed the possibility that tariffs and immigration policy could increase inflation. On Friday—the SPX’s biggest down day in more than two months—the consumer sentiment report showed inflation expectations remained elevated, while sentiment remained weak.

The number: -8.9%, Walmart’s (WMT) two-day decline after releasing earnings last Thursday. The company topped its headline numbers but issued downbeat forward guidance, raising questions about the ability of the US consumer to continue to anchor the economy.

The scorecard: The SPX lost the least ground last week, while the Russell 2000 (RUT) small-cap index fell the most, slipping into negative territory for the year:

US index returns for week ending February 21, 2025.

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)


Sector returns: The strongest S&P 500 sectors were utilities (+1.4%), health care (+1.07%), and energy (+1.06%). The weakest sectors were consumer discretionary (-4.3%), communications services (-3.7%), and industrials (-2.1%).

Stock movers: GeneDx (WGS) +48% to $112.76 on Tuesday, Unity Software (U) +30% to $28 on Thursday. Septerna (SEPN) -47% to $6.87 on Tuesday, Prog Holdings (PRG) -28% to $30.58 on Wednesday.

Yields: The 10-year Treasury yield fell 0.06% to 4.42% last week.

Futures: April WTI crude oil (CLJ5) fell $0.31 to $70.40 last week, thanks to a 3.1% Friday sell-off. April gold (GCJ5) hit an intraday record high of $2,973.40 last Thursday, and closed Friday up $52.50 for the week at $2,953.20. Biggest gainers: April natural gas (NGJ5) +11.3% (see “Fueling the AI story”), May oats (ZOK5) +7.7%. Biggest decliners: May cocoa (CCK5) -11.5%, May orange juice (OJK5) -8.6%.

Coming this week

A busy final week of February features the Fed’s go-to inflation gauge (PCE Price Index), revised Q4 GDP, durable goods, and more housing data:

Monday: Chicago Fed National Activity Index
Tuesday: S&P Case-Shiller Home Price Index, FHFA House Price Index, consumer confidence
Wednesday: new home sales
Thursday: durable goods orders, GDP (Q4, second estimate), pending home sales
Friday: personal income and spending, PCE Price Index, trade balance in goods (advance), advance retail and wholesale inventories, Chicago PMI, existing home sales

More high-profile retail names will report earnings this week, but NVIDIA (NVDA) has the potential to set the tone for tech this week:

Monday: Fresh Del Monte Produce (FDP), Cleveland-Cliffs (CLF), Hims & Hers (HIMS), Public Storage (PSA), Tempus AI (TEM), Zoom (ZM)
Tuesday: DigitalOcean (DOCN), Home Depot (HD), Keurig Dr. Pepper (KDP), First Solar (FSLR), Intuit (INTU), Keysight Technologies (KEYS), Lemonade (LMND), Light & Wonder (LNW), Workday (WDAY)
Wednesday: Advance Auto Parts (AAP), Anheuser Busch InBev (BUD), Dycom (DY), Lowe's (LOW), TJX (TJX), Verisk Analytics (VRSK), Agilent (A), C3 AI (AI), Salesforce (CRM), eBay (EBAY), Howard Hughes (HHH), Nvidia (NVDA), Snowflake (SNOW)
Thursday: J.M. Smucker (SJM), Dell Technologies (DELL), Duolingo (DUOL), HP (HPQ), NuScale Power (SMR)
Friday: Apellis Pharmaceuticals (APLS), Owens & Minor (OMI), Pure Storage (PSTG)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

February’s last hurrah

With a week left in the month, the stock market is on pace for a sub-par February—negative but unspectacular. If the month had ended last Friday, the SPX’s February return would have been -0.45%—much worse than the median return for all Februaries over the past 34 years (0.83%), but much better than the -3.1% median return for the 14 negative Februaries.1

However, a lot can happen in five days, and whether this month turns out to be better or worse than average may depend on whether the SPX exhibits the tendency for a late-February rally outlined in “Bumps in the road.” (Last week followed the pullback pattern discussed in “S&P 500 tests range.”)

Given this week’s lineup of high-profile earnings and key economic data, there will arguably be more than enough short-term catalysts to tilt the market, one way or the other.

 

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1 All figures reflect S&P 500 (SPX) monthly closing prices, 1991-2024. Supporting document available upon request.

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