In February, our family officially welcomed a new "permitted" driver, as Channing obtained his permit. Having worked with many of you since he was a newborn, the thought of him driving around the beltway is quite impactful. It's astounding how quickly time flies. If you recall when your children started driving or if this milestone is approaching for you, it certainly brings excitement along with some concerns. Just as Channing will learn to navigate through side-streets and highways, households, investors, and business leaders are similarly navigating recent news and changes in administration.
Market Update:
In February, similar to what we observed in January, the markets remained volatile, influenced by a lackluster jobs report, higher Consumer Price data, and trade policy announcements that seemed to shift frequently. Overall, markets and stocks traded lower throughout the month, with brief moments of optimism on days when announcements contradicted expected changes. The Dow Jones and the S&P500 dropped more than (-1.50%) for the month, while the technology-heavy Nasdaq declined by (-3.97%).
At the surface, the markets appeared to be trying to navigate the future, but beneath the surface, we observed the start of a shift away from the more speculative sectors. The Russell 2000 Index, consisting of small-cap companies, fell over (-5.00%) for the month, alongside a shift out of some of the major established names within the Magnificent 7. Such rotations are not uncommon during times of uncertainty regarding regulations, taxation, and trade. Everyone will be watching to see if this will be a standard rebalancing of risk profiles or something more significant.
At the sector level, the Consumer Discretionary sector (-6.98%) and Technology Sector (-2.29%) were the hardest hit as everyone is trying to assess the potential for a slowdown in consumer and household spending. Meanwhile, the Real Estate (+4.18) and Consumer Staples (+3.99%) sectors benefited from the underlying market rotations.
Looking ahead, the FOMC (Federal Open Market Committee) will convene on March 18th & 19th. We will be observing how they interpret the economic data and assess the overall economic health. Additionally, we will monitor CPI readings, employment data, and try to determine the outcome of trade policy.
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