Market Minute
Weekly analysis from the FS Investments Research team
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March 3, 2025
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Equities
US equity markets lost momentum early this week, falling 2.5% by Thursday’s close before jumping 1.60% on Friday to end the week down 0.95%. Market sentiment was dampened by ongoing policy uncertainty, as the Trump administration proposed a potential 25% tariff on EU imports. Nvidia, one of the favored Magnificent 7 members, failed to uplift investor spirits despite reporting a revenue beat, albeit the smallest in two years. The sour mood spread broadly throughout the Mag 7 as the index now sits almost 12% beneath it December peak. Overseas, European and Asian equities fell on the backs of broadening tariff threats.
Fixed income
U.S. 10-year yields steadily declined this week off Monday’s open of 4.43% as tariff news dominated headlines. Investors appear to have weighed the risks to growth more heavily, as the commitment to tariffs by the Trump administration now appears to be firmer than markets previously anticipated. Friday’s PCE report eased concerns of a near-term spike in inflation, with core PCE rising 0.3% m/m and 2.6% y/y, consistent with expectations. This softened 10-year yields an additional 5bps on Friday to close the week at 4.21%.
Commodities
Policy discussions significantly influenced commodity markets this week. Oil prices remained relatively stable, closing out the week with a slight decline of 0.91%. Supply concerns and uncertainty resurfaced following President Trump’s revocation of a license granted to Chevron for operations in Venezuela. Gold prices decreased as the dollar strengthened, driven by the Trump administration’s announcement of tariffs on Canada, Mexico, and China. Bitcoin experienced a sharp decline, falling nearly 13% this week and now down over 25% from its peak.
Economic overview
U.S. households received a boost to personal income in January, with m/m growth of 0.9%. This heartily exceeded expectations of 0.4% m/m. However, consumers showed hesitancy to spend these gains, with personal consumption declining by 0.2% m/m. This fell short of expectations for an increase of 0.2%. Friday’s reports are consistent with the Conference Board Consumer Confidence survey, which has shown consumer confidence declining each month since hitting a 16-month peak last November.
Source: Bloomberg Finance, L.P.