Market Minute: Big Week for Markets
After last week’s drawdown in the S&P 500, followed by a bounce on Friday, the market is trying to determine whether this level represents a near-term bottom or something more significant. This week, investors will closely watch a substantial amount of economic data, along with the Federal Open Market Committee (FOMC) meeting on Wednesday, where the Fed will announce its policy decisions for the month. The market largely expects interest rates to remain unchanged, but the Fed will also release updated economic projections.
With slightly more clarity on tariff policy, the projections from FOMC members may lean more hawkish around the economy, potentially leading to a reassessment of rate cut expectations for the year. Inflation remains persistent in certain areas, making it challenging for the Fed to justify rate cuts. However, concerns surrounding the labor market—especially with government job cuts by the Department of Government Employment (DOGE) and their immediate impact on contractors—are becoming more pronounced. Some analysts estimate that there are two private contractors for every government employee, which could push the Fed to prioritize job growth as a greater risk to the U.S. economy. This concern might accelerate rate cuts in an effort to mitigate the economic impact of job losses and a weakening economy.
To start the week, Retail Sales is in the spotlight. Last month’s unexpected decline in Retail Sales was widely attributed to adverse weather events. February’s data was mixed at best—Core Retail Sales met market expectations with a 0.3% increase, rebounding from a revised contraction of -0.6%. However, Headline Retail Sales fell short of expectations, growing just 0.2% month-over-month compared to the anticipated 0.6%. Despite the softer report, 10-year Treasury yields moved higher alongside equities.
Later this week, investors will focus on Housing Starts and Building Permits data on Tuesday, followed by the FOMC statement and updated Summary of Economic Projections on Wednesday. The week will conclude with Existing Home Sales data on Thursday, rounding out a significant stretch of economic releases.
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