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Market Recap: Retail Sales, Trump Tariffs, Housing Market

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Market Recap: Retail Sales, Trump Tariffs, Housing Market

SPY
S&P 500
Last week: -1.60%
YTD: 2.36%
1-year: 19.65%
DIA
Dow
Last week: -2.46%
YTD: 2.23%
1-year: 12.81%
ONEQ
Nasdaq
Last week: -2.52%
YTD: 1.04%
1-year: 22.67%
IWM
Russell 2000
Last week: -3.62%
YTD: -1.43%
1-year: 10.25%
LG
Large Growth
YTD: 0.92%
1-year: 23.14%
LV
Large Value
YTD: 4.13%
1-year: 15.10%

 

Retail Sales Slump In January

Retail sales fell 0.9% in January, much worse than expected, signaling a potential slowdown in economic growth. Consumer spending, which drives two-thirds of U.S. economic activity, saw declines across multiple sectors, though some analysts attributed the drop to bad weather and a decline in auto sales after a strong December. Inflation remains above the Federal Reserve’s 2% target, with consumer prices rising 0.5% in January, while wholesale prices showed some softening. Additionally, import and export prices saw notable increases, with fuel costs surging 3.2% for the month.

Trump Plans to Expand Tariffs

President Donald Trump announced plans to expand U.S. tariffs to include automobiles, pharmaceuticals, and semiconductors, with duties potentially starting at 25% and increasing over time. The move builds on the administration’s aggressive trade policies, including existing tariffs on steel and aluminum, and is intended to encourage companies to relocate manufacturing to the U.S. While the auto industry in Mexico, Japan, and Canada would be significantly affected, the pharmaceutical sector in Japan and India could face higher drug costs and potential shortages. Semiconductor tariffs could impact major suppliers like Taiwan Semiconductor, affecting companies such as Nvidia and Apple.

Housing Market Showing Weak Demand

The U.S. housing market remains weak as high mortgage rates, rising prices, and limited inventory continue to challenge buyers. Existing home sales dropped 4.9% in January, more than expected, despite a slight year-over-year increase, while median home prices hit a record high for the month at $396,900. Inventory is growing but remains below balanced levels, with homes spending an average of 41 days on the market. Higher-priced homes are seeing stronger sales, while affordability issues continue to sideline first-time buyers and those seeking lower-priced homes.

Consumer Sentiment Drops Drastically

U.S. consumer sentiment fell sharply in February to a 15-month low, with the University of Michigan’s Consumer Sentiment Index dropping to 64.7 from 71.7 in January. Households expressed growing concerns that President Trump’s proposed broad-based tariffs could reduce their purchasing power. Inflation expectations surged, with one-year inflation projections rising to 4.3%, the highest since November 2023, and five-year expectations reaching 3.5%, the highest since 1995. These figures suggest increasing consumer unease about economic conditions and potential cost pressures in the near future.

  • Alex is a Certified Financial Planner™. He brings nearly a decade of experience working with individuals, families, and business owners. Prior to working for Base Wealth Management, Alex worked for Fidelity Investments and an independent wealth management firm in Venice, FL. Through many years of practice, he specializes in helping clients navigate their financial goals through comprehensive financial planning. He received his bachelor’s degree in economics from Texas A&M University.

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