/perspectives/weekly-viewpoint/tariff-tantrum-continues

Tariff Tantrum Continues

The S&P 500 finished the week lower and has now declined in six of the past seven weeks as tariff related uncertainty, federal government layoffs, and funding cuts have rattled sentiment and ignited worries over a potential recession.

March 17, 2025

Performance for Week Ending 3.14.2025:

The Dow Jones Industrial Average (Dow) fell 3.1 percent, the Standard & Poor’s 500 Index (S&P 500) lost 2.3 percent and the Nasdaq Composite Index (NASDAQ) finished down 2.4 percent. Sector breadth was negative with 9 of the 11 S&P sector groups closing lower. The Consumer Staples sector (-4.3 percent) was the weakest performer while Energy (+2.6 percent) was the strongest.

Index* Closing Price 3.14.2025 Percentage Change for Week Ending 3.14.2025 Year-to-Date Percentage Change Through 3.14.2025
Dow 41488.19 -3.1% -2.5%
S&P 500 5638.94 -2.3% -4.1%
NASDAQ 17754.09 -2.4% -8.1%

*See below for Index Definitions

 
MARKET OBSERVATIONS: 3.10.2025  – 3.14.2025

The S&P 500 finished the week lower and has now declined in six of the past seven weeks as tariff related uncertainty, federal government layoffs, and funding cuts have rattled sentiment and ignited worries over a potential recession. This week’s drawdown pushed the S&P 500 into technical correction territory (defined by a 10 percent plus pullback from a recent high), the first such pullback since October 2023. According to Bloomberg it was the seventh-fastest correction in data back to 1929, taking just 16 trading days for it to happen.

Economic Roundup: Despite consumer and producer prices indices indicating a larger-than-expected moderation in inflation during February, the markets mostly shrugged off the report. This is because the components from both readings that feed into Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation, were relatively strong, raising concerns about the Fed’s ability to meaningfully cut rates this year. Meanwhile, small-business optimism hit a four-month low, and uncertainty approached record levels as tariff concerns grew. More businesses paused investments to evaluate Trump administration policies, while the share of firms raising prices saw its largest increase since April 2021. On a positive note, job openings rose in January, layoffs fell, and quits increased, signaling labor market resilience. This was underscored by the weekly jobless claims data, which showed unemployment applications fell by 2,000 to 220,000 in the week ending March 8.

Market Viewpoint: Despite recent market turbulence, driven more by fear than fundamentals, our favorable outlook on the equity market is unchanged, and we believe there is still money to be made this year. While near-term headline uncertainty may pose some downside risk, over the intermediate to longer-term, fundamental drivers, like the economy, earnings, and interest rates, drive stock prices. The macro environment is expected to remain supportive, with the U.S. economy on firm footing, albeit with slowing growth. The Fed is expected to continue easing policy, and while the path could prove uneven, rates are likely to drift lower over the next year. Importantly, the earnings growth outlook remains strong. Bloomberg consensus projects S&P 500 earnings growth of around 10.0 percent in 2025 and 14.2 percent in 2026. The combination of an accommodative Fed and brisk earnings growth creates a favorable backdrop for risk assets and should support the bull market. Still, with valuations elevated, earnings growth will likely be the main driver of performance, suggesting more modest gains compared to the past two years.

The Week Ahead: The focal point this week will be the two-day Federal Open Market Committee (FOMC) on Tuesday and Wednesday. While the Fed is expected to leave rates unchanged for a second straight meeting, investors are expected to parse the after-meeting communique and updated Summary of Economic Projections (SEP) for clues on the forward interest rate path. According to Bloomberg’s World Interest Rate Probability (WIRP) tool, the Fed’s next rate cut is expected to come at the June FOMC meeting. The WIRP is also projecting a total reduction of 68 basis points by year-end. On the data front, the key release will come on Monday when the February retail sales report will be released. According to Bloomberg, sales are expected to grow 0.7 percent after falling 0.9 percent in January. Other reports of interest include housing starts, import/export prices, industrial production, and existing home sales. Earnings season will continue to wind down with 9 members of the S&P 500 left to report results. Amongst this group will be Nike, FedEx, and Micron Technology. Aside from the Fed meeting it will be a relatively quiet week of Fed Speak, with just NY Fed President John Williams scheduled to speak on Friday.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.




Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.

Investing involves risk, including the possible loss of principal.

Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Wealth Solutions, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Private Investments, LLC.

© Guggenheim Investments. All rights reserved.

Research our firm with FINRA Broker Check.

• Not FDIC Insured • No Bank Guarantee • May Lose Value

This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.