As you surely know, it has been a tough stretch in the markets recently... The broad market S&P 500 Index is now down more than 9% from its record closing high of 6,144 on February 19. Year to date, the index has lost roughly 5%.
I'm Overall Optimistic on Stocks... But Cautious in the Near Term
By Marc Chaikin, founder, Chaikin Analytics
As you surely know, it has been a tough stretch in the markets recently...
The broad market S&P 500 Index is now down more than 9% from its record closing high of 6,144 on February 19. Year to date, the index has lost roughly 5%.
Uncertainty surrounding President Donald Trump's tariff policies and the Department of Government Efficiency ("DOGE") downsizing of the federal workforce has roiled the stock market.
And that means extreme volatility.
We can see the mood of fear in the market through CNN's Fear & Greed Index. It's a gauge of investor sentiment based on seven indicators. And in its reading earlier this morning, the index stood at 17 out of 100.
That marks an "Extreme Fear" level.
As the legendary Warren Buffett has famously said, "be fearful when others are greedy, and be greedy when others are fearful." But just a week ago, he said during an interview with CBS that tariffs are "an act of war, to some degree"... and that "over time, they're a tax on goods."
Meanwhile, Buffett's Berkshire Hathaway (BRK-B) is sitting on a record amount of cash.
Those two quotes neatly sum up the stock market's dilemma right now...
Make no mistake: It's a scary time to be a typical buy-and-hold investor. But if you know what's behind this volatility, there's a unique way you can use it to YOUR advantage. One former $900 million hedge-fund trader says these big swings could help you book bigger gains... quite rapidly... starting immediately. That's because during similar conditions during Trump's first term, this former trader found 17 different ways you could've doubled your money or more – here's how.
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The Fed's Forecast Reverses and Shows Shrinking GDP
We see a deeply oversold market driven by fear and uncertainty over whether the president's agenda will push the economy in a recession and usher in a period of stagflation.
And two key economic reports contributed to the recent sharp sell-off...
The first was the Federal Reserve Bank of Atlanta's recent GDPNow forecast for first-quarter GDP growth.
In the most dramatic shift on record, this model predicted an annualized drop in GDP of negative 2.8% in the first quarter of 2025. That was down from a forecast of positive GDP growth of 2.3% just one week earlier.
Meanwhile, the Institute for Supply Management's ("ISM") Purchasing Managers' Index ("PMI") report also spooked the markets...
The ISM Manufacturing PMI fell in February and pointed to slower growth in the manufacturing sector of the U.S. economy.
Importantly, it showed demand easing while prices paid were increasing. That's the classic definition of "stagflation."
Some commentators are discounting the negative GDP forecast and the increase in prices paid as caused by front-running in February by corporate purchasing managers ahead of the expected tariffs.
We'll have to wait and see about that. It's another uncertainty in an extremely uncertain period.
For now, the fear and likelihood of stagflation is very real. And that's weighing on stock prices.
As regular readers know, my "bull market" scenario for 2025 is based on a strong economy and the past 100 years of election-cycle data that show strong stock market performance in a post-election year.
But if stagflation becomes a reality and earnings suffer, I'll adjust my outlook.
So I remain "bullish" on the stock market for 2025. But I'm cautious in the near term as stocks seek to bottom out in these uncertain and volatile times.
Good investing,
Marc Chaikin
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-1.13%
4
20
6
S&P 500
-0.83%
37
324
137
Nasdaq
-0.24%
7
71
22
Small Caps
-0.01%
166
1229
506
Bonds
-0.71%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+0.47%
Materials
-0.55%
Staples
-0.77%
Utilities
-0.81%
Industrials
-1.25%
Health Care
-1.44%
Real Estate
-3.25%
Communication
-3.82%
Information Technology
-4.62%
Financial
-4.63%
Discretionary
-5.69%
* * * *
Industry Focus
Homebuilders Services
0
20
15
Over the past 6 months, the Homebuilders subsector (XHB) has underperformed the S&P 500 by -13.07%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #18 of 21 subsectors and has moved down 2 slots over the past week.
Indicative Stocks
AOS
A. O. Smith Corporat
BLD
TopBuild Corp.
WMS
Advanced Drainage Sy
* * * *
Top Movers
Gainers
SMCI
+10.68%
LUV
+8.34%
CRWD
+6.76%
VST
+5.41%
GEV
+5.21%
Losers
TER
-17.05%
EXPE
-7.28%
DAL
-7.25%
JKHY
-7.08%
TECH
-7.04%
* * * *
Earnings Report
Earnings Surprises
FERG Ferguson Enterprises Inc.
Q2
$1.52
Missed by $-0.08
DKS DICK'S Sporting Goods, Inc.
Q4
$3.62
Beat by $0.11
CIEN Ciena Corporation
Q1
$0.64
Beat by $0.23
* * * *
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