Despite looking to close on a high note today, the market continued its slide and looks to finish the week lower. The catalyst today seems to be optimism that the Senate will vote on a spending bill this afternoon or evening to avoid a government shutdown. Aside from that, the news isn’t great. Further tariffs, this time on France, and consumer sentiment sinking for the third consecutive month is having an impact. The silver lining is that the Nasdaq is now in correction territory down over 10% YTD, while the S&P 500 and DJIA attempt to avoid the same fate. I say silver lining because the swift move lower these past three weeks has put the markets all into an oversold state which in the near term could provide some resistance and perhaps even a temporary bounce.
Stocks had a rough week as uncertainty over President Trump’s fast-moving tariff shifts whipsawed markets and overshadowed encouraging signals about the economy. Concerns that the U.S. economy is showing signs of strain have receded a little after data this week showed inflation heading in the right direction once more. Prices for goods and services moved up less than expected in February, providing some relief. The Consumer Price Index (CPI) rose 0.20% for the month, putting the annual inflation rate at 2.8% slightly below analysts’ expectations. Excluding food and energy, inflation was 3.1%, down from 3.3% prior and again below analysts’ expectations. If the trend continues, this will allow some room for the Fed to make its next move. The Federal Reserve meets next week, but economists believe it will hold steady on interest rates until it sees a clear sign of economic deterioration in the data, which has been elusive so far.
One thing that is clear is that consumers are souring in real time. According to the University of Michigan Survey of Consumers, the latest reading of 57.9 represents a 10.5% decline in just the past month and well below the consensus estimate. Worries intensified over inflation and a slumping stock market according to the latest survey. To be clear, current conditions aren’t what’s worrying consumers. Expectations for the future fell 15.3% on a monthly basis and 30% from the same period last year. While inflation is coming down, consumers don’t believe the trend will continue. The one-year outlook rose 4.9% while the five-year horizon jumped 3.9%, to its highest level since February 1993. And while there are often disparities between political parties, survey officials said sentiment slumped across partisan lines along with virtually all demographics.
In closing, I wanted to wish everyone a happy National Pi Day. Pi Day is celebrated annually on March 14th and has been around since 1998 when physicist Larry Shaw came up with the idea as a way to make mathematics more fun. As such, it has become an international holiday, celebrated by math lovers and educators worldwide. Pi, represented by the number 3.14, was first used to represent the mathematical constant in the early 1700s. As you are probably aware, the number of digits in this irrational number is infinite. However, that hasn’t stopped humans from trying to memorize as many as possible. The current record holder is Akira Haraguchi, a retired Japanese engineer, who in 2006 recited more than 100,000 decimal places of pi over 16 hours. Apparently, in his mind he linked each digit with a syllable and created a collection of stories from the words those syllables formed. Now you know.