Weekly Stock Market Update: March 21-March 28, 2025

Hey everyone! Welcome to this week’s stock market update. If you’ve been keeping an eye on the markets, you’ve probably noticed things have been a bit shaky lately—especially in the US. In this post, I’m going to break down what’s been driving the market since last Friday, highlighting the factors that are helping it along and those that are dragging it down. By the end, you’ll have a solid grasp of the current situation and some practical takeaways to guide you through these uncertain times. Let’s get started!

A Quick Look at the Market Today

First, let’s set the stage. The US stock market, particularly the S&P 500, has been on a rough patch. Since the start of 2025, the S&P 500 has dropped 5.09%, and this past week didn’t bring much of a reprieve. Investors are feeling the pressure, and it’s easy to see why—there’s a lot of uncertainty in the air. But it’s not all bad news. Some sectors are holding strong, and even certain international markets are showing surprising resilience. So, what’s behind these mixed signals? Let’s dive into the details.

What’s Helping the Market?

Even in a challenging environment, there are bright spots keeping the market from sinking entirely. Here’s what’s working in its favor:

1. Sector Strength: Energy, Health Care, and Financials

While the broader market stumbles, a few key sectors are standing firm: energy, health care, and financials. These are often called “defensive sectors” because they tend to weather economic storms better than others. Here’s why they’re shining now:

• Energy: Global demand for energy remains robust, and supply chain constraints are pushing prices up, which is a boon for energy stocks.
• Health Care: People don’t stop needing medical care during a downturn, making this sector a reliable performer no matter the economic climate.
• Financials: With interest rates expected to stay elevated, banks and financial firms are seeing wider profit margins, giving them a lift.

Investors are flocking to these areas as a safe haven, and it’s helping to prop up portfolios when other stocks are faltering.

2. Europe’s DAX Steals the Spotlight

It’s not just US sectors offering hope—international markets are also making waves. Take Germany’s DAX, for instance. If you’re not familiar, the DAX is a stock index that tracks the 40 biggest and most active companies on the Frankfurt Stock Exchange—think heavyweights like Volkswagen, Siemens, and SAP. It’s a major indicator of how Europe’s economy is faring, much like the S&P 500 is for the US.

Here’s the kicker: while the S&P 500 is sliding, the DAX is hitting record highs. That’s a sign that European markets are outpacing their US counterparts right now. This split suggests that opportunities might lie beyond US borders, especially for investors willing to diversify globally.

What’s Hurting the Market?

Now, let’s shift gears and look at the challenges. These are the headwinds putting pressure on stocks and keeping investors on edge:

1. Economic Slowdown Worries: Tariffs and Trade Tensions

One of the biggest concerns right now is the fear of an economic slowdown. A lot of this stems from tariffs and trade tensions, which have been heating up. When countries slap tariffs on each other, it disrupts supply chains, jacks up costs for companies, and can slow down growth. The uncertainty around these policies is spooking investors, and it’s showing in the market’s volatility.

2. The Fed’s Wait-and-See Approach

The Federal Reserve—the US central bank—also played a big role this week. They decided to keep interest rates unchanged, sticking to their current target range for the federal funds rate. In their latest statement, the Fed struck a cautious tone, recognizing the economic uncertainty but holding off on any promises of rate cuts.

Why does this matter? The Fed has been juggling two goals: taming inflation and supporting growth. By keeping rates steady, they’re signaling they’re not ready to ease up yet, which has left some investors disappointed. That cautious stance is adding fuel to the market’s unease.

3. Consumer Confidence Slips

Another warning sign came from the University of Michigan Consumer Sentiment Index, which took a steep dive in March. This index surveys about 500 households each month, gauging how people feel about their finances, the economy’s future, and their willingness to spend. A sharp drop here is bad news because consumer spending accounts for roughly 70% of the US economy. When confidence falls, people spend less, and that can ripple through to slower growth and weaker stock performance.

Key Takeaways to Guide You

So, where does this leave you? Whether you’re an investor or just someone trying to make sense of the headlines, here are three takeaways to keep in mind:

1. Buckle Up for More Volatility

The S&P 500 is already in correction territory—down over 10% from its recent peak—and the Nasdaq, particularly tech stocks, has taken an even bigger hit. With trade worries, a hesitant Fed, and shaky consumer sentiment, the market’s rollercoaster ride isn’t over yet. Prepare for more twists and turns in the weeks ahead.

2. Diversify to Weather the Storm

Not everything is tanking. Energy, health care, and financials are holding their own, and Europe’s DAX is showing there’s strength overseas. This is a wake-up call: spreading your investments across different sectors and regions can help soften the blow when parts of the market struggle. If you’re all-in on US tech or consumer stocks, now might be a good time to reassess.

3. Watch the Consumer Closely

That drop in consumer sentiment isn’t just a number—it’s a signal. If Americans start cutting back on spending, it could hit corporate earnings and drag stocks down further. Keep an eye on upcoming retail sales figures and earnings from consumer-driven companies. They’ll tell us if this gloom is turning into something more concrete.

Final Thoughts

To wrap it up: the US stock market is grappling with some tough challenges, but it’s not a total washout. Sectors like energy, health care, and financials are providing a lifeline, and international markets like the DAX are offering a ray of hope. On the flip side, fears of an economic slowdown, a cautious Federal Reserve, and declining consumer confidence are keeping the pressure on.

Volatility is likely here for the long haul, so staying diversified and tuned into consumer trends will be key. The market’s story is still unfolding, and I’ll keep you posted as it evolves. Thanks for reading! Want to connect, feel free to send me an email at Robert@LinkFinancilAdvisory.com or use this link to find a time to connect with me.