Your Weekly Update for Monday, March 3, 2025.
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Mike Elerath
CERTIFIED FINANCIAL PLANNERTM
CERTIFIED IN LONG-TERM CARE
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Bill Roller
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CHARTERED FINANCIAL ANALYST
CERTIFIED FINANCIAL PLANNERTM
CHARTERED MARKET TECHNICIAN
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Summary
Markets were MIXED last week. The Dow Jones Industrial Average was UP 0.95% to 43,890.1 while the S&P500 ended DOWN 0.98% to 5,954.50. The Nasdaq Composite FELL 3.47% to 18,847.28. The annual yield on the 30-year Treasury FELL 15. basis point(s) to 4.516%.
Economic data included U.S. GDP for Q4-2024 coming in unchanged, but Q1 expectations were revised downward. Personal income and spending were strong, while PCE inflation continued to decelerate. Housing data was mixed with home prices continuing to rise, although at a slower pace, and new home sales fell sharply. Consumer confidence continued to show lackluster results.
Equities were mixed, with U.S. value and U.K. outperforming, and negative results elsewhere. U.S. bonds fared positively as interest rates declined along with inflation and some fears about growth. Commodities fell back across the board, along with a stronger U.S. dollar.
Economic Notes
(0/+) The second release of U.S. GDP for the 4th Quarter of 2024 held steady at 2.3%, as expected. As the key component, personal consumption growth was also unchanged at 4.2%. Otherwise, government spending was revised up by a half-percent, but capex investment was reduced by a further percent to -3.2%. Headline PCE was revised up by 0.1% to an annualized 2.4% for the quarter, as was core to 2.7%, with minimal changes on either for the full year 2024.
The Atlanta Fed’s GDPNow estimate for Q1-2025 took a dramatic turn last week, falling from as high as 3.9% in early February, to 2.3% on Feb. 19, to now a contractionary -1.5%. It appears that a sharp drop in the net exports category (via adjusted results for Q4) bode negatively for Q1, resulting in the change. Much of this was likely due to front-loading of imported goods before any potential tariffs are applied, while other categories remain in the positive. However, this measure is subject to quick adjustment week-to-week as each new economic data point is incorporated. The Blue Chip economist consensus estimate is still running just above 2%, within a range of about 1.5-2.5%, close to long-term trend. In recent earnings calls, several U.S. companies (notably in manufacturing, such as autos) have mentioned that they’re unwilling to spend a lot of capital without further clarity on potential tariffs. This represents a qualitative economic risk less related to tariffs directly, but a contractionary side effect of uncertainty on corporate risk-taking behavior. Also notably, several of these companies appear poised to pass along any tariff-based price increases directly to consumers to the greatest extent possible, which is the source of the expected price level bump should tariffs be implemented in a more dramatic way.
Some observers have cheered the efforts of the newly-formed Department of Government Efficiency (DOGE), headed by Elon Musk, in order to root out wasteful federal spending. However, others have not only started to worry about the potential impact on reduced government services, but also, ironically, the slowing of government spending on the economy in the near-term. As government spending overall represents a non-small piece of the overall economy (over 20%), a slowing of federal spending is a direct negative input into GDP growth, particularly if growth isn’t made up for in the private sector. As it is, consumers make up the largest piece (nearly 70%), but after a buying boom since the pandemic, it’s becoming more difficult to see this slice growing further at an exponential pace. At the same time, slowing government spending could provide a means to shrink the annual budget deficit, possibly helping the tax cut math, and could reduce upward pressure on U.S. Treasury debt levels over the longer term. Although the thresholds are argued about a bit academically, it’s assumed that higher government debt-to-GDP has tended to act as a brake on a country’s economic growth, while lower debt ratios have eased this burden, so a net positive.
(0/+) Personal income rose 0.9% in January, well above the 0.4% expected, led by cost-of-living adjustments in wages and payouts like Social Security (which rose 3% for the new year). Personal spending fell for the first time in six months, by -0.2%, in contrast to the 0.2% increase expected, led downward by a sharp decline in auto and recreational purchases, while housing/utilities spending spiked. While some headlines suggested perhaps a pullback due to uncertainty about the administration’s tariff policies, it’s more likely most of these results were weather- and wildfire-related. The personal saving rate rose by 1.1% to 4.6%. Year-over-year, personal income was up 4.6%, while spending gained 5.6% (which included an 8% rise in government benefit payments), which amounts to decent real growth after inflation. The headline PCE inflation index rose by 0.3%, in keeping with expectations, as did core PCE, after removing food and energy. Over the past 12 months, headline PCE decelerated a tenth to a 2.5% pace, while core PCE fell by -0.3% to 2.6%. The latter was considered fairly significant, as it brought inflation increasingly closer to the Federal Reserve’s target level of 2.0%—although it still has room to go.
(+) Durable goods orders rose 3.1% in January, exceeding the 2.0% rise expected. Removing the volatile segment of transportation orders brought this down to a flat result for the month, as much of the headline gain was driven by a $10 bil. increase (94%) in commercial/non-defense aircraft. Following that, the core capital goods orders segment rose 0.8% for the month, well above expectations for a meager change, with gains in computers/electronics offsetting declines in automotive and fabricated metals. Capital goods shipments fell by -0.3%, in contrast to an expected rise. Year-over-year, total durable goods orders were up 3%, led by the transportation segment up 7%.
(+) The S&P Case-Shiller 20-city home price index for December rose by 0.5% on a seasonally-adjusted basis, but -0.1% on an unadjusted measure. For the month after seasonal adjustment, by city, gains were highest in Boston and Chicago, while Tampa and Washington were weakest. Year-over-year, the index rose by 4.5%, led by gains of up to 7% in New York, Chicago, and Boston, while Tampa continued in last place, as prices fell -1%. It was noted by S&P that home price gains continue in the positive, but have sharply decelerated from the post-pandemic period, with the Northeast now assuming leadership at the expense of the West Coast, where prior strength has moderated.
(+) The FHFA house price index for December and Q4-2024 pointed to a monthly increase of 0.4%, and 1.4% for the fourth quarter. Monthly results were led by the Mountain division, up 1.4%, while the West North Central (ND south to MO) and West South Central (OK/AR/TX/LA) each declined -0.1%. For 2024 as a full year, prices rose 4.5% nationally but represented a deceleration from the strong 6.9% increase of 2023. All nine census regions saw positive results for the year, led by the Mid Atlantic (NY/NJ/PA) at 7%, while the West South Central only rose 2%. The FHFA acknowledged the decelerating pace of home price increases during the year but also mentioned that “the price growth accelerated during the quarter as the inventory of homes for sale tightened even further.”
(-) New home sales fell by -10.5% in January to a seasonally-adjusted rate of 657k, below the median forecasted decline of -2.6%, although growth in December was revised up by nearly 5%. Sales rose in the West, but declined most in the South, and appear to have reflected more extreme weather in that part of the country compared to normal. Nationally, new home sales are down -1% over the past year, pointing to the continued lack of new supply coming onto the market, despite it being badly needed. The median new home price was $446,300, up nearly 4% over the past year, although down from the fall 2022 peak. Sales appear to be rising in the lower-to-mid price points, as one might expect with higher financing and per square foot costs. Inventory rose to 9.0 months’ supply, up to the higher end of the band over the past year.
(-) The Conference Board index of consumer confidence fell by -7.0 points in February to 98.3, well below the lesser decline to 102.5 expected. Assessments of the present situation fell by -3 points, while expectations for the future fell by -9 points. The labor differential declined by -2 points, and implied that jobs are slightly “harder to get.” Inflation expectations for the coming year rose by 0.6% to 4.8%, along with readings of other similar surveys, pointing to continued consumer price angst.
(-) Initial jobless claims for the Feb. 22 ending week rose by 22k to 242k, well above the 221k median forecast. Continuing claims for the Feb. 15 week fell by -5k to 1.862 mil., below the 1.871 mil. expected. Claims rose the most in the largest states, with no regional outliers. There have been some questions about when the DOGE-driven Federal government staffing cuts could appear in the numbers. While it hasn’t yet occurred, some signs might include a ramp-up in claims in the DC area as well as VA/MD, and KS/MO, where a large cohort of Federal workers is based, although the broad impact could be further dispersed nationwide, based on the agencies affected.
Market Notes
| Period ending 2/28/2025 | 1 Week % | YTD % |
| DJIA | 1.01 | 3.32 |
| S&P 500 | -0.95 | 1.44 |
| NASDAQ | -3.45 | -2.31 |
| Russell 2000 | -1.44 | -2.87 |
| MSCI-EAFE | -0.81 | 7.30 |
| MSCI-EM | -4.31 | 2.28 |
| Bloomberg U.S. Aggregate | 1.26 | 2.74 |
| U.S. Treasury Yields | 3 Mo. | 2 Yr. | 5 Yr. | 10 Yr. | 30 Yr. |
| 12/31/2024 | 4.37 | 4.25 | 4.38 | 4.58 | 4.78 |
| 2/21/2025 | 4.32 | 4.19 | 4.26 | 4.42 | 4.67 |
| 2/28/2025 | 4.32 | 3.99 | 4.03 | 4.24 | 4.51 |
U.S. stocks saw a back-and-forth week, highlighted by news clips and worries about potential tariffs and mixed economic data. By the end of the week, the President’s confirmation that tariffs on Canada and Mexico are set to take effect next week, along with a vow to double tariffs on China, resulted in weaker market sentiment. By the end of Friday an apparent chaotic meeting between President Trump and Ukrainian President Zelensky, set up as a potential deal for U.S. reconstruction aid in return for natural resources, left more uncertainty about near-term European activity.
Sector results were also mixed, with gains of at least a percent in the ‘value’ areas of financials, health care, industrials, and consumer staples. Technology was the laggard, down -4% upon a negative response to NVIDIA’s fairly decent revenue and earnings report, with the narrative closely watched for any deviations in AI hardware demand trends. Real estate also gained several percent for the week, along with the fall in interest rates.
Foreign stocks were mixed, with gains in the U.K. offsetting declines in Japan and the emerging markets. Much of this was due to positive local results that were negatively offset by a roughly 1% rise in the U.S. dollar. Most recently, European earnings have improved somewhat in addition to specific strength from local defense companies assumed to benefit under greater demanded spending and lessened U.S. support. Over the last few weeks, European equities have experienced among their strongest levels of inflows in the last five years, with rising hopes for a Ukraine/Russia peace deal. Emerging markets continued to be plagued by doubt about potential impacts of U.S. tariffs, with additional potential tariffs on China announced, with most key countries in the EM index down 3-5% for the week.
Bonds saw gains of over a percent in the U.S. as longer-term interest rates pulled back upon signs of some inflation and economic softening. Accordingly, governments and investment-grade corporates outperformed high yield and bank loans. Foreign developed market bonds lost ground upon a stronger dollar, while emerging market debt was mixed.
Commodities were down across the board last week, following the dollar’s strength and some concerns over potential tariff impacts on trade and specific commodity products to be determined. Agriculture and precious metals suffered the strongest declines. Crude oil fell nearly a percent last week to just under $70/barrel, with supply and demand factors remaining in a relative balance. Natural gas prices fell -7% along with warmer temperatures across the country.
Mortgage Rates
“This week, mortgage rates decreased to their lowest level in over two months,” said Sam Khater, Freddie Mac’s Chief Economist. “The drop in mortgage rates, combined with modestly improving inventory, is an encouraging sign for consumers in the market to buy a home.”
The 30-year FRM averaged 6.76% as of February 27, 2025, down from last week when it averaged 6.85%. A year ago at this time, the 30-year FRM averaged 6.94%.
The 15-year FRM averaged 5.94%, down from last week when it averaged 6.04%. A year ago at this time, the 15-year FRM averaged 6.26%.
Freddie Mac’s Primary Mortgage Market Survey® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.
Through our relationship with Mortgage Window, Inc. (NMLS#2485156) in Vancouver, Washington we originate residential and reverse mortgages.
Selected Cryptocurrencies
| Symbol | Name | Price | 24h % | 7d % | Market Cap | Volume(24h) |
| BTC | Bitcoin | $95,977.10 | 0.09% | -0.34% | $1,903,079,877,673 | $25,468,491,320 |
| ETH | Ethereum | $2,691.08 | -4.29% | -2.88% | $324,468,132,336 | $23,858,327,041 |
| XRP | XRP | $2.49 | -2.56% | -6.98% | $144,313,657,825 | $4,053,319,601 |
| BNB | BNB | $643.08 | -1.96% | -4.67% | $91,624,423,839 | $1,620,866,571 |
| SOL | Solana | $159.15 | -5.89% | -14.20% | $78,157,946,644 | $3,670,792,075 |
| DOGE | Dogecoin | $0.23 | -5.48% | -12.76% | $34,278,727,992 | $1,321,314,599 |
| ADA | Cardano | $0.74 | -5.13% | -9.07% | $25,931,966,661 | $610,136,399 |
| TRX | TRON | $0.25 | 2.74% | 1.08% | $21,405,599,747 | $608,541,387 |
| LINK | Chainlink | $16.68 | -5.85% | -14.27% | $10,648,557,488 | $360,005,879 |
| SUI | Sui | $3.23 | -3.65% | -1.86% | $9,988,050,401 | $832,698,895 |
| XLM | Stellar | $0.32 | -2.19% | -6.19% | $9,922,455,870 | $230,333,264 |
| AVAX | Avalanche | $23.76 | -5.18% | -7.22% | $9,869,132,648 | $340,037,390 |
| HBAR | Hedera | $0.23 | 6.66% | 1.61% | $9,436,311,544 | $352,205,299 |
| LTC | Litecoin | $124.13 | -3.16% | 0.22% | $9,379,496,169 | $870,863,838 |
| TON | Toncoin | $3.66 | -3.03% | -4.27% | $9,146,608,949 | $179,591,613 |
| LEO | UNUS SED LEO | $9.65 | -0.93% | -1.42% | $8,921,854,501 | $2,897,752 |
| SHIB | Shiba Inu | $0.00 | -4.80% | -7.50% | $8,745,507,966 | $195,075,895 |
| OM | MANTRA | $8.48 | 1.30% | 14.82% | $8,260,444,486 | $340,344,403 |
Information current as of 5:25 AM PST, Monday, March 3, 2025. Source: https://coinmarketcap.com
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Sources: Ryan Long, CFA, FocusPoint Solutions, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Citigroup, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management,
MarketfieldAsset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, PIMCO, Standard & Poor’s, StockCharts.com, The Conference Board, Thomson Reuters, T. Rowe Price, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wall Street Journal, The Washington Post. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. FocusPoint Solutions, Inc. is a registered investment advisor.
Notes key: (+) positive/encouraging development, (0) neutral/inconclusive/no net effect, (-) negative/discouraging development.