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Major Index Performance (as of Thursday’s Close):
- S&P 500: Down (-4.3%)
- Dow Jones Industrial Average: Down (-4.64%)
- Nasdaq Composite: Down (-4.90%)
- Gold: Up 3.22%
S&P 500 Enters Correction
The S&P 500 has continued its recent decline, now down 10.1% from its high of 6,147.43. A market correction is defined as a 10% decline from a recent high, while a 20% decline would indicate a bear market. The S&P 500 fell 1.4% on Thursday, its first correction since 2023. This ended a stretch of 343 trading days without such a move, nearly double the historical average. Corrections typically see an average decline of 13.8% and last around 115 days; this time it took just 22 days.
The 10-year Treasury yield fell four basis points to 4.27%, and the U.S. dollar saw modest gains as investors sought safe-haven assets amid ongoing trade tensions and economic uncertainty. Recent tariff announcements added to market volatility. The Trump administration indicated that existing tariffs on steel and aluminium will remain in place, and new tariffs on certain imports from Europe could take effect as early as April. Meanwhile, wholesale inflation data showed a mixed picture, overall inflation remained flat in February, but core goods prices, excluding food and energy, saw their largest increase in over two years.
Key Economic Data This Week:
- CPI YOY: 2.8% (vs. 2.9% estimate)
- PPI YOY: 3.2% (vs. 3.3% estimate)
- Initial Jobless Claims: 220K (vs. 225K estimate)
Market Indicators Show Diverging Signals
A closely watched market indicator, known as the Dow Theory, is signalling potential market weakness. According to this theory, sustained trends in the broader market are typically confirmed by both the Dow Jones Industrial Average and Dow Jones Transportation Average moving in tandem. As of Thursday, the transportation index had declined 19% from its November peak, nearing bear market territory, while the Dow Jones Industrial Average is down 9.3% from its December record.
Weakness in these key indexes, along with notable declines in homebuilders, semiconductor stocks, and industrials, reflects broader market uncertainty. We continue to monitor these developments; particularly as economic growth shows signs of slowing.
Gold Hits Record Highs
Gold prices have continued their upward trajectory, approaching the $3,000 per ounce milestone. On March 13, spot gold rose 1.6% to $2,979.76 an ounce, marking its twelfth record high this year. Analysts attribute the rally to strong demand from central banks and gold’s role as a hedge against economic uncertainty. GLD, an ETF that tracks the price of gold, continues to be a staple holding in our strategies.
The Dow Theory is aligned with our outlook on the market. We have been cautious on the market for quite some time, and believe the economy is weakening. Sector rotation shows strengthening in healthcare, consumer staples, and utilities, while technology and consumer discretionary lag. Value stocks are outperforming growth stocks, a trend we see continuing through 2025. Money markets provide an attractive yield as we search for opportunities in the market.
Have a great weekend,
Your Portfolio Management Team
