Major U.S. stock indices ended a volatile week lower as conflicting signals on tariffs created uncertainty.  At the same time, developed international and emerging market indices end the week higher on expectations on increased defense spending.  On Thursday, the Nasdaq 100 index entered correction territory, down 10% from its peak but trimmed the week’s losses after a Friday rally.

Federal Reserve chair Powell stated the FED is awaiting greater clarity on President Trump’s policies before making the next move on rates.

The European Central Bank met and cut its key deposit rate 0.25% to 2.5%.  ECB Chair Lagarde, stated inflation is expected to reach the 2.0% target in early 2026 but cited inflation risks from increased defense spending and a trade war.

Treasury bond yields rose with the 30-year bond yield at 4.620% and the 10-Year note at 4.320%.  Freddie Mac reported that the average 30-year mortgage rate fell to 6.63%.  Crude oil rose to $67.06 a barrel and natural gas rose to $4.399 per MMBTUs.  The U.S. dollar index fell sharply to 103.81 and gold rose to $2915.50 an ounce.

In economic reports this week:

• The S&P Global released its purchasing managers indices for February.  Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
  • U.S. manufacturing PMI rose from 51.2 to 52.7.
  • U.S. services PMI fell from 52.9 to 51.0.
  • Mexico manufacturing PMI fell from 49.1 to 47.6.
  • Canada manufacturing PMI fell from 51.6 to 47.8.
  • Canada services PMI fell from 49.0 to 46.6.
  • China manufacturing PMI rose from 50.1 to 50.8.
  • China services PMI fell from 51.4 to 51.0.
  • Japan manufacturing PMI rose from 48.7 to 49.0.
  • Japan services PMI rose from 53.0 to 53.7.
  • Eurozone manufacturing PMI rose from 46.6 to 47.6.
  • Eurozone services PMI fell from 51.3 to 50.6.
• The Federal Reserve reported productivity rose 1.5% in the fourth quarter.
  • Output increased 2.4%.
  • Hours worked increased 0.8%.
  • Hourly compensation increased 3.8%.
  • Unit labor costs rose 2.2% in Q4.
  • From a year earlier, productivity increased 2.0%.

• The Commerce Department reported:
  • Construction spending fell 0.2% in the month of January.
• • New orders for manufactured goods rose 1.7% in January following a 0.6% decline in December.
• • The trade deficit rose 34% in the month of January.
    • Exports rose 1.2%.
    • Imports rose 10.0%.  The surge in imports was likely due to anticipated tariffs.
• • Wholesale inventories rose 0.8% in January after falling 0.4% in December.
• The Labor department reported:
  • The U.S. added 151,000 jobs in February, less than economist’s expectations of 170,000.
    • January was revised down to 121,000.
    • Unemployment edged up to 4.1%.
    • Average hourly earnings rose 0.3% in February to $35.93.
    • The average work week was unchanged at 34.1 hours.
  • Seasonally adjusted first-time claims for unemployment were 221,000, a decrease of 21,000 from the previous week’s unrevised level.  
    • The 4-week moving average of claims, designed to smooth out volatility, was 224,250 an increase of 250 from the previous week’s unrevised level.
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: Weekly Petroleum Status Report.  Also, the EIA reported in the prior week:
  • Field production of crude oil rose from 13.502MM BPD to 13.508MM BPD.
  • Natural gas storage fell 80BN cubic feet and was below its average level during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs was unchanged at 486 and the number of natural gas rigs fell 1 to 102.

Please call us if you have any questions.

Loren Rex – Emeritus

Erik A Smith, AIF® – President & C.E.O.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).

Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.bls.gov/news.release/pdf/cpi.pdf

https://www.bls.gov/news.release/ppi.nr0.htm

https://www.fiscal.treasury.gov/reports-statements/mts/current.html