One New York City-based chief investment officer sees the recent decline in the stock market as “simply volatility of garden diversity.”
US stocks were riding a roller coaster led by engineers last week amid concerns over tariffs, stagflation and slowing technology revenues.
After some sharp reversals added to market volatility, the major stock index closed the week’s mix.
The S&P 500 finished at 5,954 on February 28th, down 0.98% for the week. The Dow Jones industrial average closed at 43,840, up 0.95%. The Nasdaq finished the week at 18,847, a 3.47% drop. The Small Cap 2000 also fell 1.47% to close at 2,163.
But positive sentiment quickly reversed amid concerns that tech stock sellers had AI tapered and their resolve to move forward with plans to impose tariffs on Canada and Mexico.
Sales pressure continued on February 25th, following the conference committee’s disappointing news about US consumers. The February Consumer Trust Index recorded the biggest decline since August 21, 2024, as consumers have become more pessimistic than current and future economic conditions, particularly the labour market conditions.
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“Of the five components of the index, only consumer valuations of current business conditions have been improved, but slightly improved. The views on current labor market conditions have weakened. Consumers have become more pessimistic about future business conditions and not optimistic about future revenues. The pessimism about future employment outlook has deteriorated, reaching a height of 10 months.”
Signs of a slower economy become almost evident each week, but there is plenty of evidence that inflation continues to rise, including the Federal Reserve’s favorite inflation gauge, the Personal Consumption Expense Index (PCE), released on Friday. It showed that prices paid by consumers rose 2.5% in January, surpassing the December 2024 rise and the Federal Reserve target of 2%.
“Today’s PCE will be a little more comfortable after the Worrisome CPI print in January,” David Russell, Global Market Strategy Director at Tradestation, told the Epoch Times.
“The decline in personal spending confirms negative retail sales data we’ve obtained earlier, suggesting that the economy started on a soft footing in 2025. Combined with the weak data so far in February, growth is becoming a Wall Street concern. Consumers may finally be throwing towels.”
The combination of slowing growth and rising inflation renews the fear that the economy will head towards the worst macroeconomic environment for stocks: stags. When growth slows, revenues hurt. Higher inflation damages valuations through higher interest rates.
Revenues from Nvidia on Wednesday afternoon added to Wall Street’s unrest over tariffs and economic direction. The tech giant reported revenue and revenue that beat market expectations, but could not reassure bullish tech investors that AI spending could continue to drive technology revenue.
This shift in investor sentiment came to light on Thursday morning when Wall Street was due to another reversal due to a sharp decline in Nvidia’s stock.
Sales continued for most of Friday’s trading session, led by a sharp decline in personal spending. Yet another major reversal towards the closure saw all stock indexes rise significantly that day.
Robert Ruggiello, chief investment officer at New York City-based Brave Eagle Wealth Management, sees the recent decline in the stock market as “simply volatility of garden diversity.” This type of volatility is primarily due to the unstable nature of February and the great benefits throughout January.
Therefore, Ruggiello does not believe that the recent market decline is a sign of a deeper bear market on the horizon.
“It’s important that investors be opportunistic, as AT, AT, or S&P levels above 6,000 represent the entrance to investors who have sat in too much cash and missed rallies since the November 2024 presidential election,” he told the Epoch Times.
