Weekly Market Commentary February 24th to February 28th 2025

The Personal Consumption Expenditures Price Index (PCE), the Federal Reserve’s preferred measure of inflation, rose as anticipated at an annual rate of 2.5%. The monthly increase of 0.3% was regarded as positive, although it indicates that further efforts to limit price increases are necessary. Notably, the underlying data revealed that Personal Income surged by 0.9%, significantly surpassing the expected increase of 0.4% while the consumer spent cautiously during the month with a contraction of 0.2%. This shift contributed to an increase in the Personal Savings rate, which climbed to 4.6%.

Sales of New Single-Family Homes in the United States experienced a decline of 10.5% in January, reaching a seasonally adjusted annual rate of 657,000 units, significantly lower than the anticipated 671,000. The primary factor contributing to the sluggish housing market remains affordability, as home prices have risen, and mortgage rates hovered around 7% during January. The median price for new homes rose by 3.7% to $446,300, marking the highest level since October 2022.

Pending Sales, a metric reflecting contracts that have been signed but not finalized, experienced a decline of 4.6%, reaching the lowest point since the National Association of Realtors started monitoring this metric in 2001. Trends similarly observed in New Homes Sales also plagued Pending Sales, but economists highlighted the coldest winter in the last quarter-century as an additional reason for the slow activity. While sales increased month-over-month in both the Northeast and West regions, there was a significant downturn in the South, a region that usually spearheads housing activity, with a decrease of nearly 15%.

The market finished a second straight week in the red as investors rotated out of high-flying technology stocks.  The S&P 500 finished the week at 5,955, down 1.0% while the tech heavy Nasdaq fell 3.5% to 18,847.  The Dow Jones finished up slightly for the week at 4,428.  In fixed income markets, we continued to see a risk-off move as the 10-Year U.S. Treasury closed down 0.22% at 4.21%. 

Next week’s important economic data releases include February’s Unemployment Report and ISM Manufacturing and Services data.