Friday’s Market Performance:
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$S&P 500(.SPX)$ : -2.0%
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Dow Jones: -1.7% (-716 points)
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$NASDAQ(.IXIC)$ : -2.7%
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Weekly Streak: 7 of the past 9 weeks in the red
The latest economic data stoked fears of stagflation, a toxic mix of high inflation and stagnant growth.
Key Indicators:
Inflation Remains Sticky
Core PCE
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Core PCE (Fed’s preferred inflation gauge): +0.4% MoM (vs. 0.3% est.)
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Inflation expectations: 5% (highest since Nov. 2022)
Consumer Spending is Slowing
US Consumer
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Real spending: +0.1% last month
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Consumer sentiment: 57 (lowest in 2+ years)
Tariff Uncertainty Adding to Woes
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Trump's 25% auto tariffs take effect next week
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Investors worry about higher costs and retaliation
What is Stagflation? Stagflation last plagued the U.S. economy in the 1970s. Historically, during such periods: Commodities (gold, oil, agriculture) outperform. Utilities, defensive stocks, and value-oriented retailers hold up and Stocks and long-term Treasuries lose ground
Stagflation
Sector Winners on Friday: Utilities (+0.7%)
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American Water Works (+2.1%)
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FirstEnergy (+1.8%)
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Eversource Energy (+1.5%)
Biggest Losers:
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Tech: Nasdaq -2.7% $NVIDIA(NVDA)$ $Roundhill Magnificent Seven ETF(MAGS)$ $Tesla Motors(TSLA)$
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Consumer Discretionary: Higher inflation weakens spending power $Netflix(NFLX)$
Is a Recession Inevitable?
Bearish View:
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Consumer sentiment plunging (Trump’s economic policies seen as inflationary)
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Inflation expectations at a 32-year high (highest since 1993)
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Tariff-driven uncertainty discouraging corporate investment
Bullish View:
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BofA’s Aditya Bhave: “Confidence isn’t everything.”
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Real-time spending data suggests consumers are still resilient.
Investment Strategy: Preparing for Stagflation
Commodities (gold, oil, agriculture). Defensive sectors: Utilities, Healthcare, Consumer Staples. Selective Financials & Industrials and Some value-oriented retailers.
Final Thought: With one trading session left in the worst quarter since 2022, investors are bracing for more volatility. Can the market stabilize, or will stagflation fears keep the selling pressure on?
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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.
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