Happy Presidents Day! The equity markets displayed resilience, managing to close the week with gains despite a barrage of economic data and geopolitical developments. The S&P 500 climbed 1.5%, while the Dow Jones Industrial Average gained 0.6%. Leading the charge was the Nasdaq Composite, up 2.6%.
The surge in mega-cap stocks significantly influenced overall market performance. The Vanguard Mega Cap Growth ETF (MGK), mirroring this trend, jumped 2.5%, outpacing the broader market. A telling sign of the current market dynamics. This dominance was evident in the S&P 500 sector performance, with Information Technology leading with a 3.8% increase, followed by Communication Services at 2.0%, both sectors heavily populated with mega-cap constituents.
Interestingly, the market-cap weighted S&P 500 outpaced the Invesco S&P 500 Equal Weight ETF (RSP), which only managed a 0.5% gain. This highlights how the performance of a few large companies can skew the overall picture, something to keep in mind.
Bonds and Treasuries
The bond market experienced its own set of fluctuations this week. The 10-year Treasury yield ended slightly lower, at 4.48%, a mere one basis point down from the previous week. Similarly, the 2-year yield edged down three basis points to 4.26%.
These subtle shifts indicate a market grappling with uncertainties surrounding the future trajectory of interest rates. It seems investors are cautiously positioning themselves, awaiting clearer signals from the Federal Reserve.
The Bloomberg Corporate Bond Index reflected this nuanced environment, posting a modest gain of 0.3%. Despite a slight widening of credit spreads, the drop in Treasury yields provided enough lift to keep corporate bonds afloat.
US Markets
The US market landscape was painted with a mix of economic data, tariff announcements, and insights from Federal Reserve Chair Powell.
Inflation figures took center stage, with the Consumer Price Index (CPI) rising to 3.0% year-over-year in January. That’s the first time it’s hit this level since June, spooking some investors. This rise exceeded expectations and, consequently, dampened hopes for near-term interest rate cuts. The CME’s FedWatch tool is now pricing in just one rate cut for 2025, a significant shift from earlier expectations.
President Trump’s decision to impose a 25% tariff on steel and aluminum imports sent ripples through the market. Scheduled to take effect on March 12, this move is poised to impact various sectors, from construction to transportation. While U.S. producers might see some benefits, countries like Canada, Germany, and several Asian nations are bracing for negative consequences. There is, however, talk of Australia potentially receiving an exemption.
Adding to the market narrative was Chair Powell’s semi-annual testimony before Congress. Echoing sentiments from the January FOMC meeting, he reiterated the Fed’s stance of “no hurry” to adjust its policy stance. He described the economy as “strong overall” with a “solid” labor market but noted that inflation still hasn’t reached the 2% goal yet.
On the corporate front, Chevron unveiled plans to slash 20% of its workforce by 2026, a strategic move to cut $2-3 billion in annual operating costs. This decision follows a Q4 loss in its fuel business and ongoing uncertainty surrounding the Hess deal.
In contrast, Anduril is set to take over Microsoft’s $22 billion Army headset deal, overseeing the production and development of the IVAS program. This comes as Anduril eyes a $2.5 billion funding round at a $28 billion valuation. Talk about shifts in fortune.
Adding to the economic data mix, the New York Fed’s January Survey of Consumer Expectations remained steady at 3.0%. However, the February University of Michigan Consumer Sentiment Index revealed a surge in year-ahead inflation expectations, jumping from 3.3% to 4.3%.
The retail sales report for January showed a noticeable weakness, dropping 0.9%, the sharpest decline in two years. Some attribute this to winter storms and rising prices dampening consumer spending. Meanwhile, the industrial production report for January pointed to growth, albeit driven by utilities cranking to meet demand for heat amidst cold weather.
The January PPI report brought some relief, suggesting it could help keep the PCE Price Index (the Fed’s preferred inflation gauge) in check. Certain components, such as airfares and physician care, showed month-over-month declines.
Also, President Trump’s reciprocal tariff plan was seen as less economically provocative than feared (in other words, don’t fall for the political hype). To wit, the tariffs will be applied on a case-by-case basis until April 1 at the earliest.
Global Markets
The global economic landscape presented a series of developments worth noting. In China, consumer inflation picked up steam in January as food and service prices climbed ahead of the Lunar New Year holiday. The CPI rose 0.5% from a year earlier, up from 0.1% in December.
In the UK, the economy managed to eke out 0.1% growth in Q4, surprising estimates. While production declined (-0.8%), robust growth in services (+0.2%) and construction (+0.5%) offset the dip.
On the geopolitical front, President Trump plans to meet with Putin to push for an end to the Ukraine war. Meanwhile, Treasury Secretary Scott Bessent met with Zelensky in Kyiv to discuss security guarantees and a minerals agreement.
Apple is partnering with Alibaba to integrate AI into iPhones sold in China. The move aids Apple’s AI strategy and navigates China’s strict tech rules. Shares of $BABA rose 20% this week.
Israel and Hamas resolved their ceasefire dispute after Trump’s relocation demands and rising tensions. The two countries conducted a hostages-for-prisoners exchange yesterday.
The U.S. and India aim to double trade to $500B by 2030, Modi announced with Trump. Talks during their meeting focused on tariffs, defense sales, and AI, amid lingering trade tensions.
Commodities & Crypto Corner
Energy
The oil and energy markets witnessed a flurry of activity in the past week. WTI crude oil futures settled at $70.7 per barrel on Friday, down about 0.4% for the week. The decrease in oil prices was primarily due to hopes for a potential Russia-Ukraine peace deal, which could ease sanctions and increase global energy supplies.
Natural gas prices saw an increase, with the prompt-month NYMEX natural gas settling at $3.34 per MMbtu on Monday, February 10, up $0.14/MMbtu. Colder weather in the Midwest and East contributed to increased natural gas demand, with residential/commercial demand averaging 48 Bcf per day year-to-date, compared to 42.7 Bcf per day for the same period last year. LNG exports increased, averaging 14.7 Bcf per day month-to-date, up from 13.7 Bcf per day for the same period last year.
The U.S. implemented new sanctions targeting individuals and companies involved in the sale of Iranian oil to China. Norway considered restricting energy exports to Europe, potentially impacting EU energy security.
Retail gasoline prices in the U.S. increased by $0.046 to $3.128 per gallon, while diesel prices rose slightly by $0.005 to $3.665 per gallon.
These developments reflect ongoing geopolitical tensions, weather-related demand fluctuations, and shifting supply dynamics in the global energy markets.
Metals
Last week, the gold and precious metals markets experienced significant activity, with gold prices reaching new all-time highs. On February 17, 2025, MCX Gold for the April 4 contract was trading at Rs 85,156 per 10 grams, up 0.55% from the previous close, after hitting an all-time high of Rs 86,360 per 10 grams on February 11. In the international market, COMEX gold price was around $2,915 per troy ounce.
Silver futures for the March 5 contract were trading at Rs 95,683 per kg on the MCX, up 0.10% from the previous close, touching a high of Rs 95,774 per kg. The gold-to-silver ratio exceeded 90:1 as of February 13, with gold trading at $2,940 and silver at $32.22.
COMEX gold inventories saw a significant increase, with total gold inventory in the three largest vaults reaching 30 million ounces on February 11, up from 14 million ounces on December 11, 2024 – a 115% increase in two months. Since the beginning of 2025, gold has increased by 10.60%, reaching $2,901.06 on February 11, while silver saw a 40.42% year-over-year increase, reaching $31.86 on the same date. These numbers reflect strong safe-haven demand for gold and significant price volatility in the precious metals market amidst ongoing global uncertainties.
Crypto
The cryptocurrency markets displayed strong momentum and increased trading activity. Bitcoin (BTC) continued its upward trajectory, reaching new highs and approaching the $100,000 mark. As of February 17, 2025, BTC was trading at $96,725.17, showing a 0.59% increase over the previous week. The trading volume for BTC reached $45.2 billion on February 16th, marking a 15% increase from the week before.
Ethereum (ETH) also saw positive movement, trading at $2,700.82 with a 1.07% increase. Other notable cryptocurrencies had mixed performances, with Cardano (ADA) and Solana (SOL) showing gains of 2.48% and 3.08% respectively, while BNB experienced a significant drop of 7.81%.
The week was marked by several key events in the crypto space. Analog’s $ANLOG token had its initial listing, and eOracle Network launched its token sale. WalletConnect (WCT) concluded its token sale on CoinList, while Solayer (LAYER) had its initial listing. Nakamoto Games (NAKA) expanded its games onto Google Play for PC, potentially increasing its user base.
Technical indicators suggested bullish trends for major cryptocurrencies. Bitcoin’s Relative Strength Index (RSI) approached overbought territory, while its Moving Average Convergence Divergence (MACD) showed a bullish crossover. On-chain metrics also supported these trends, with an increase in active addresses for both BTC and ETH.
The market also saw increased interest in AI-related tokens, with projects like SingularityNET (AGIX) and Fetch.ai (FET) experiencing growth in trading volumes. This trend reflects the growing influence of AI advancements on the crypto market sentiment.
Key Events & Calendar
As we look ahead to the coming week, here are the key dates and events to keep an eye on:
- Monday, February 17: U.S. markets closed for Presidents’ Day
- Tuesday, February 18: Empire State Manufacturing Index, NAHB Housing Market Index
- Wednesday, February 19: Building Permits, Housing Starts, EIA Crude Oil Inventories
- Thursday, February 20: Initial Jobless Claims, Philadelphia Fed Manufacturing Index
- Friday, February 21: Existing Home Sales, University of Michigan Consumer Sentiment
Also, a data-light week and investors will be focusing on the January housing data for the U.S., including housing starts on Wednesday and existing home sales on Friday. Friday will also feature the release of purchasing manager’s preliminary print by S&P Global for February and the consumer sentiment purchasing index from the University of Michigan.
Earnings
It will be a busy week for earnings, so here’s a snapshot of some of the major names reporting next week.
- Monday, February 17: UFP Industries (UFPI), Noble (NE), and Transocean (RIG)
- Tuesday, February 18: Arista Networks (ANET), Medtronic, Cadence Design Systems (CDNS), Occidental Petroleum, and Vulcan Materials (VMC)
- Wednesday, February 19: HSBC Holdings (HSBC), Analog Devices, Carvana (CVNA), and Garmin (GRMN)
- Thursday, February 20: Walmart, Alibaba Group Holding, Booking Holdings (BKNG), Copart (CPRT), MercadoLibre (MELI), and Southern (SO)
Before I sign off, here’s something to chew on: The average millionaire invests 20% of their income each year. It’s not about how much you make, but how much you keep and put to work.
Until next week, keep a steady hand on the tiller and remember, patience is an investor’s best friend. This is Irving Wilkinson, wishing you profitable days ahead.
