Stocks declined last week due to uncertainty surrounding President Donald Trump’s tariff plans and their potential impact on the economy. The S&P 500 fell over 3%, the Dow Jones Industrial Average dropped over 2%, and the Nasdaq Composite led the losses with nearly a 3.5% decline. The Nasdaq is now in correction territory, having fallen more than 10% from its recent high in December.
This week, investors will closely watch updates on inflation, particularly the Producer Price Index (PPI) and Consumer Price Index (CPI), for insights into how tariffs could affect prices. Additionally, updates on inflation expectations and consumer sentiment are scheduled. Corporate earnings releases from Oracle and Adobe will also be key events.
Following the recent February jobs report, which showed the addition of 151,000 jobs and a slight uptick in the unemployment rate to 4.1%, markets are still expecting three interest rate cuts from the Federal Reserve in 2025. However, Fed Chair Jerome Powell stated that further rate cuts are not imminent and emphasized the need for clarity before any decisions are made.
Economists anticipate that February’s CPI data will show a slight decrease in annual inflation to 2.9% and a 0.3% increase in prices month-over-month. Core inflation, excluding food and energy prices, is expected to be lower than the previous month. Wells Fargo economists believe the CPI figures will reflect initial effects of tariffs on inflation and expect inflation to hover around 3% for the year.
While concerns about weaker economic data and tariff impacts have led to market volatility, major financial institutions are not forecasting a recession at this time. Instead, they are revising GDP growth estimates downwards, suggesting a slower pace of economic expansion rather than a contraction.
Many economists are beginning to discuss the possibility of a recession. According to Goldman Sachs’ latest forecast, the chances of a recession occurring in the next 12 months have increased from 15% to 20% compared to the previous year. Despite this, companies are not overly concerned about a potential recession. Data from FactSet reveals that only 13 companies mentioned the word “recession” during S&P 500 earnings calls this quarter, marking the lowest number of mentions since the first quarter of 2018. This suggests that the recent fluctuations in the stock market are mainly due to a recalibration of expectations in a year where many had anticipated strong performance from the US economy.
Former Council of Economic Advisors chairman Jason Furman shared his perspective with Yahoo Finance, stating, “I don’t believe the economy is suddenly shifting towards a negative direction, but there are indications of deceleration due to uncertainties and sentiment.”
Weekly calendar:
Monday
– Economic data: New York Fed one-year inflation expectations, February (previously 3%)
– Earnings: Asana (ASAN), Oracle (ORCL), Vail Resorts (MTN)
Tuesday
– Economic data: NFIB small business optimism, February (expected 101, prior 102.8)
– Earnings: Casey’s (CASY), Dick’s Sporting Goods (DKS), Kohl’s (KSS)
Wednesday
– Economic data: Consumer Price Index, month over month, February (expected +0.3%, previously +0.5%); Core CPI, month over month, February (expected +0.3%, previously +0.4%); CPI, year over year, February (expected +2.9%, previously +3%); Core CPI, year over year, February (expected +3.2%, previously +3.3%); Real average hourly earnings, year over year, February (previously +0.9%); MBA Mortgage Applications, week ending March 7 (previously +20.4%)
– Earnings: Adobe (ADBE), American Eagle (AEO), iRobot (IRBT), Vera Bradley (VRA)
Thursday
– Economic data: Producer Price Index, month over month, February (expected +0.3%, previously +0.4%); PPI, year over year, February (expected +3.3%, previously +3.5%); Initial jobless claims, week ending March 8 (previously 221,000)
– Earnings: DocuSign (DOCU), Dollar General (DG), Rubrik (RBRK), Ulta Beauty (ULTA)
Friday
– Economic data: University of Michigan consumer sentiment (expected 63.9, prior 64.7)
– Earnings: No notable earnings scheduled.
Josh Schafer is a reporter for Yahoo Finance. Follow him on Twitter @_joshschafer. For the latest stock market news and in-depth analysis, including
