Stocks extend retreat

It’s not often the monthly jobs report and a speech from Fed Chair Jerome Powell can get pushed to the market sidelines, but that’s what happened last week.

Stocks fell to seven-month lows as the White House kept markets off balance by implementing tariffs on Canada, Mexico, and China last Tuesday, then walking back portions of them, in piecemeal fashion, later in the week.  

Despite a strong intraday rebound on Friday, the S&P 500 (SPX) posted its third weekly decline in a row, and its biggest since last September:

The headline: Market approaches seven-month lows as trade-policy disruption continues.

The fine print: While the monthly jobs report released on Friday showed the labor market softened in February, it didn’t suggest it’s crumbling. But it remains to be seen whether employers will become more cautious in an uncertain policy environment, turning the recent slowdown into a trend.

The number: 172,000, the number of job cuts in February, reported last Thursday. That was the highest total since 2020.

The scorecard: With the exception of the Dow Jones Industrial Average (DJIA), the major indexes ended last week in negative territory for the year:

Sector returns: The strongest S&P 500 sectors last week were health care (+0.2%), materials (-1%), and  real estate (-1.5%). The weakest sectors were financials (-6%), consumer discretionary (-5.4%), and energy (-3.8%).

Stock movers: Astronics (ATRO) +25% to $24.91 on Wednesday, Willdan Group (WLDN) +30% to $41.80 on Friday. On the downside, Viant Technology (DSP) -29% to $14.12 on Tuesday, MongoDB (MDB) -27% to $192.98 on Thursday.

Yields: It was a choppy week for bonds. Last Monday the benchmark 10-year Treasury yield closed at its lowest level (4.18%) since early December, but rebounded to end the week up 0.13% at 4.32%.

Futures: April WTI crude oil (CLJ5) ended last week $2.72 lower at $67.04. April gold (GCJ5) rallied $65.60 last week, closing Friday at $2,914.10. Biggest gainers: March VIX (VXH5) +14.9%, April natural gas (NGJ5) +14.7%. Biggest decliners: May cocoa (CCK5) -9.1%, April milk (DCJ5) -5.9%.

Inflation—and consumer sentiment—take center stage:

●Monday: NY Fed consumer inflation expectations
●Tuesday: NFIB Business Optimism Index, Job Openings and Labor Turnover Survey (JOLTS)
●Wednesday: consumer price index (CPI)
●Thursday: producer price index (PPI)
●Friday: Michigan consumer sentiment (preliminary)

This week’s earnings include:

●Monday: BioNTech (BNTX), Oracle (ORCL)
●Tuesday: Ciena (CIEN), Dick's Sporting Goods (DKS), Kohl's (KSS), United Nat Foods (UNFI), Casey's General Stores (CASY)
●Wednesday: Williams Sonoma (WSM), Zim Integrated Shipping (ZIM), Adobe (ADBE), American Eagle Outfitters (AEO), Crown Castle (CCI)
●Thursday: Dollar General (DG), Duluth (DLTH), DocuSign (DOCU), Ulta Beauty (ULTA)
●Friday: Buckle (BKE)

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

Whenever stocks are in pullback mode, investors are always eager for an answer to the unanswerable question, “When will the market turn?”

In such situations, traders often consult the Cboe Volatility Index (VIX), which tends to jump when the SPX sells off. On Friday, the VIX climbed to its second-highest level of the past seven months, coming up just a little shy of its December 18 high of 28.32:

There may be two ways to interpret where the VIX stood at the end of last week vis-à-vis the SPX. Some traders may point out that, during the recent downswing, the SPX has yet to register a “climactic” selling event like the one on December 18, when the index fell 3% and the VIX jumped 74%.

But other traders may see the fact that the VIX didn’t jump as high as it did in December as an indication that the market is currently experiencing less anxiety than it was then, even though the SPX has fallen to a much lower low. That could be seen as a contrarian bullish signal.

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