Weekly Market Commentary March 3rd to March 7th 2025
The January ISM manufacturing report was the first of several closely watched economic data releases for the week. It exceeded estimates to the upside, increasing to 50.3%, and the second consecutive monthly expansion. Supplier deliveries, inventories, prices and the orders backlog were attributable to the strength.
ADP offered a prelude to Friday’s employment report with February private payrolls that increased well-below the estimate (140k) to 77k and the smallest increase since July 2024.
Later in the week there was the ISM services report and similar to the manufacturing report also exceeded expectations, expanding at a rate of 53.5 and the eighth consecutive monthly expansion. Inventories, the backlog of orders and employment were areas of strength.
Wrapping up the week was the most anticipated economic data from the Bureau of Labor Statistics, and it came in lower than forecast.
Non-farm payrolls increased to 151k in February, while the prior two months were revised down by 2k. The unemployment rate increased by 0.1% to 4.1%. Overall, a lackluster report as the job market has cooled to start the year with a two-month average of 138k, down from the 2024 average of 167k. Upcoming reports will be highly anticipated to see if the recent trend continues.
The S&P 500 opened the week at 5,954 and continued the declines of the past month to start the week with heightened volatility, as tariffs and fears of slower growth have weighed on risk assets. Despite a relief rally on Friday, it closed the week at 5,770, down about 3.1% for the week and has now given up the post-election gains, down 1.9% for the year.
The yield on the 10-Year U.S. Treasury was marginally higher on the week by 0.10% to 4.30%. The week ended with a positive slope on the 2-10 segment of the yield curve of 0.32%. Futures markets have priced in 3 Fed Funds cuts in 2025.
Key consumer economic releases next week include the producer (PPI) and consumer (CPI) price indices.
