Weekly Recap, 2-17 through 2-21 "Market Dynamics: Highs, Lows, and Economic Concerns"

Market Dynamics: Highs, Lows, and Economic Concerns

Market Overview

Monday was a snooze fest for the markets, all thanks to President's Day. But once the week kicked off, the S&P 500 strutted its stuff, hitting a new high of 6,147 because investors were playing hard to get with selling and couldn't resist a bargain. By the end of the week, though, the party slowed down as folks decided to cash in their chips. People started whispering about stocks being too expensive and the market losing its mojo, making everyone a bit hesitant to dive back in.

Economic Indicators and Growth Concerns

• The February S&P Global US Services PMI took a nosedive below 50, waving a big "contraction" flag.

• The University of Michigan Consumer Sentiment report for February dropped to 64.7, like a sad balloon.

• Existing home sales took a 4.9% tumble in January, leaving real estate agents scratching their heads.

These gloomy economic vibes, coupled with Walmart's (WMT) less-than-stellar fiscal predictions, had sellers coming out of the woodwork later in the week.

Market Performance

Big and small stocks took a hit, while the rest of the market managed to keep its head above water. The S&P 500, burdened by its market cap, slipped 1.7% from last Friday, and the equal-weighted S&P 500 wasn't far behind with a 0.7% dip. The Russell 2000 tumbled 3.7%, and the Vanguard Mega Cap Growth ETF (MGK) dropped 2.7%, proving that size doesn't always matter.

Sector Performance

• The S&P 500 consumer discretionary sector went on a 4.3% diet.

• The communication services sector also had a rough week, shedding 3.7%.

• Meanwhile, the defensive sectors like utilities (+1.4%), consumer staples (+0.9%), and health care (+1.1%) were the teacher's pets, acing the week's performance test.

Tariffs and Market Sentiment

Traders saw tariff talks as a game of poker, not a permanent fixture. President Trump decided to up the ante with a 25% auto tariff starting April 2 and hinted at more tariffs for pharmaceuticals and semiconductors, just to keep things spicy.

Weekly Index Performance

• Dow Jones Industrial Average: -2.5% for the week / +2.1% YTD

• S&P 500: -1.7% for the week / +2.2% YTD

• Nasdaq Composite: -2.5% for the week / +1.1% YTD

• S&P Midcap 400: -3.0% for the week / -0.6% YTD

• Russell 2000: -3.7% for the week / -1.6% YTD

Tuesday's Market Activity

Tuesday was as exciting as watching paint dry until the last few minutes, when the S&P 500 decided to show off with a new high of 6,129. The Dow and Nasdaq sneaked up a bit too. A secret positive vibe lurked beneath the surface, pushing more buyers to join the party at the day's end.

Tuesday's Economic Data

• February Empire State Manufacturing Index: 5.7 (consensus -2.0), previous -12.6

• February NAHB Housing Market Index: 42 (consensus 47), previous 47

Wednesday's Market Activity

Wednesday played copycat with Tuesday, with indices hanging around their usual spots before the S&P 500 decided to break another record. Profit-takers showed up, but the market shrugged them off, turning into a buying frenzy by the end. Mega cap and semiconductor stocks were the stars of the show.

Wednesday's Economic Data

• January housing starts: -9.8% month-over-month to 1.366 million (consensus 1.400 million), previous 1.515 million

• Building permits: +0.1% to 1.483 million (consensus 1.450 million), previous 1.482 million

• Weekly MBA Mortgage Index: -6.6%, Purchase Index: -5.9%, Refinance Index: -7.3%

Thursday's Market Activity

Thursday woke up on the wrong side of the bed after Wednesday's S&P 500 high, with indices taking a nosedive due to consolidation and profit-taking. But by afternoon, the market had a change of heart, and buyers returned. Walmart (WMT) had a rough day, dragging down the Dow and S&P 500 consumer staples sector with its gloomy fiscal forecast.

Thursday's Economic Data

• Weekly Initial Claims: 219K (consensus 217K), previous revised to 214K

• Weekly Continuing Claims: 1.869 million, previous revised to 1.845 million

• February Philadelphia Fed Index: 18.1 (consensus 20.5), previous 44.3

• January Leading Indicators: -0.3% (consensus 0.0%), previous revised to 0.1%

Friday's Market Activity

Friday was a rollercoaster, with the market taking a dive on high-volume options expiration day. The major indices hit the floor, with the S&P 500 barely hanging on above its 50-day moving average at 6,010, down 1.7%. Concerns about growth and sky-high valuations had everyone cashing out. UnitedHealth (UNH, Financial) took a tumble after a Wall Street Journal report on a DOJ civil fraud investigation into its Medicare Advantage billing practices.

Today's Quirky News

Uh-oh! UnitedHealth (UNH, Financial) took a nosedive on the stock rollercoaster after the U.S. Department of Justice decided to play detective with their Medicare Advantage billing practices. The Inspector General is on the case, sniffing out any fishy diagnoses that might have fattened up the payments. UnitedHealth is waving their "Not Guilty" flag, but the stock still took a tumble like it slipped on a banana peel, marking its biggest drop since March 2020. Meanwhile, the brainy folks at Oppenheimer and Mizuho are crossing their fingers that the financial damage will be just a scratch.

In the world of medicine, Novo Nordisk (NVO) has waved its magic wand and poof! The shortage of its popular diabetes and weight loss drugs, Ozempic and Wegovy, is over. But this spell has turned Hims & Hers Health (HIMS, Financial) into a pumpkin, as they were whipping up their own versions during the shortage. Now that the potion is back, Hims & Hers has to hang up their cauldrons, which might leave them feeling a bit deflated.

Over in the energy drink jungle, Celsius Holdings (CELH, Financial) has made a splashy $1.8 billion move to gobble up Alani Lu. This power play is all about getting a bigger slice of the energy drink pie, especially among the ladies who are sipping these caffeinated concoctions more than ever.

Meanwhile, trucking stocks like Old Dominion (ODFL, Financial) and Saia (SAIA, Financial) are feeling the squeeze after J.P. Morgan issued a "watch out!" warning. The buzz is that Amazon (AMZN) might crash the less-than-truckload party, threatening to hog the road. TFI International's CEO is bracing for a bumpy ride, predicting a freight industry storm in the first half of 2025.

In the land of biotech, Viking Therapeutics (VKTX, Financial) shares shot up like a rocket amid whispers of a potential takeover. Pfizer (PFE) might be eyeing them like a kid in a candy store, following earlier gossip that Eli Lilly (LLY) had similar sweet dreams. Viking's market cap has ballooned to a whopping $3.5 billion!

Kenvue (KVUE) is enjoying a little stock market sunshine with rumors flying that Procter & Gamble (PG) or Unilever (UL) might come knocking. Meanwhile, they're in a proxy wrestling match with Starboard Value, who's pushing for some stock-boosting moves.

AMD (AMD) is reportedly chatting about selling its server chip plants in Asia, with a price tag that could hit $4 billion. This sale would include the goodies they picked up from ZT Systems, all part of their master plan to beef up data center AI systems.

Rivian Automotive (RIVN) is hitting the brakes with a recall of over 17,000 vehicles due to a headlight hiccup that’s dimming visibility. The faulty models seem to have been assembled with a few too many crossed wires, but Rivian promises to swap out the headlight control modules for free. Let there be light!