Over the past 50 years February has been the second worst month

March 5, 2025

Over the past 50 years February has been the second worst month for stocks as some take profits after the traditionally strongest 3 months of the year, so we came into the month with low expectations.  We knew President Trump would hit the ground running and we expected the plethora of decisions we have seen, some market moving, some not.  After gaining more than 50% in the last 2 years the market was overdue for a pause and that is what we saw in February.  Uncertainty about changes under the new administration and some doubts about the validity of the massive spending on artificial intelligence pushed investors to take a more wait and see approach which resulted in a move towards risk off investing.  At the end of the month the S&P 500 was down 1.4% and is now 1.2% higher on the year.  The rate on the 10-year Treasury dropped 36 basis points to 4.19%, oil dropped 3% to $70, and gold set a new all-time high before closing the week, just 1.3% higher.

The month began with the market moving lower after Trump announced tariffs on China, Mexico and Canada.  The market rebounded the following day despite China retaliating with their own tariffs, as Trump put the Canada and Mexico tariffs on hold.  It was a volatile week that ended with a report that fewer than expected than 143,000 new jobs were created in January while analysts were looking for 169,000.  Despite the political turmoil during the week strong corporate earnings helped keep the sellers at bay. At week’s end it was much ado about nothing as the S&P closed with a loss of .2%.  The focus of the 2^nd week was inflation reports, and we learned both the Consumer Price Index and the Producer Price Index were higher than expected while retail sales in January were disappointing.  However, this negative economic news was overshadowed by strong corporate earnings reports, driving the S&P 500 up 1.5% for the week.  The third week was shortened by the President’s Day holiday on Monday and on Wednesday the S&P 500 hit a new all-time high.  On Thursday retail giant Walmart issued disappointing quarterly results and disappointing guidance that cast doubt on the strength of the economy.  The selling continued Friday, which turned out to be the worst day for the market thus far this year.  At the end of the week the S&P was down 1.7%.  The selling that began with the Walmart announcement continued into the last week of the month with investors taking a more risk-off approach.  Many recent “highflyers” saw selling and Bitcoin dropped below $80,000 for the first time in over 3 months.  A strong rally on the last day of the month helped the S&P ended the week down just 1%.

March has traditionally been an average month for the market with a typical return of .6% and a higher close 60% of the time.  The market is currently in a corrective cycle that may continue for a few more weeks.  We will continue to face uncertainty as to what policies the Trump administration will initiate and the concerns about spending on artificial intelligence are likely to continue.  Corporate earnings have been pushing the market higher, but most Q4 corporate reports have been issued, and we don’t get the next batch until April.  We do not expect a major selloff, but we are overdue for a 10% pullback and there are few catalysts to push the market higher in the near term.  We have had a small hedge in place and hold higher than normal cash.  It we do get a 10% pullback we plan to close out the hedge and become more fully invested as a pro-business President is likely to be good for stock prices.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on X @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.