Michael Reinking:
Hello, I'm Michael Reinking, senior market strategist at the New York Stock Exchange, and this is Market Storylines. Every week, we are here to keep you up to date on the key trends and events driving global markets, and we are recording on Thursday before first pitch, so let's dive into this week's Market Storylines.
If you haven't figured it out by now, I'm a big sports fan and sports can sometimes be a microcosm of life. Spring is officially upon us, and today in a couple of hours, the first pitch will be thrown on opening day. Every team starts with a clean slate and there's the eternal hope that this could be the year your team goes on the magical run. Now, the NCAA tournament also resumes today, and by the end of the weekend, there will be 12 teams that go home heartbroken. Now that dichotomy and range of emotion is something consistently seen in life and financial markets.
Now recently, this has been seen in business and consumer survey data with the reversal of the initial post-election exuberance as the administration's playbook was sequenced differently than most had presumed, initially focused on cost-cutting and tariffs as opposed to tax cuts and a deregulatory environment presumed to fuel economic growth.
Now, over the last month, the often erratic communication of how tariffs would be carried out has added to that uncertainty and weighed on markets. Now, last week, we noted that after four weeks of consecutive losses in US equity markets, there seemed to be a shift in communication by the administration, which had suddenly gone silent, seemingly helping markets stabilize. Now, that cone of silence was finally broken late in the session last Friday with President Trump suggesting there could be some flexibility in the implementation of tariffs. Now, this along with some record flows into the close, helped the S&P500 recoup the day's losses and snap the four-week losing streak, ending the week up a half a percent.
Now, before moving on, let's take a minute to talk about those flows. Friday was triple-witch expiration, which is the quarterly expiration of stock options, index futures and index options, as well as the quarterly index rebalances. Now, the volumes associated with this event have consistently gotten larger over recent years, and Friday was a record trading day on the New York Stock Exchange with 4.7 billion shares traded and over $260 billion of notional value.
Now, the closing auction on the NYC remains the single largest equity trade event on the planet. These large liquidity opportunities are a testament to our unique model, leveraging floor brokers and DMMs, allowing maximum flexibility for investors.
Now over the weekend, there were some positive press reports suggesting that tariffs would be more targeted than previously thought, focused on the 15% of nations with persistent trade imbalances with the US. Now also on Monday, the S&P Global Flash PMIs were released. Manufacturing gave back the recent rebound, but more importantly, the services PMIs improved, jumping to 54.3 from 51 last month, reversing most of the February decline, which if you recall, was the data point that really seemed to kick off the growth scare at the end of last month.
Now, this mix of catalysts and a reversal of some of the systematic flows kicked off a risk-on move with most major US indices rallying around 2%, with the S&P 500 reclaiming its 200-day moving average. Now, there were broad-based gains, but leading the charge was the growth factor and momentum stocks that had been dismantled over the last month.
Now, Tuesday was a reasonably quiet session with the S&P 500 consolidating those gains and breaking the streak of 22 days where the range in the index had exceeded 1%. However, the calm didn't last long. Yesterday was a rough session with the S&P 500 falling 1%. Now, the weakness began in the AI trade after another research report suggesting that Microsoft was pulling back on data center deals, but ultimately bled into the other momentum stocks that rallied to start the week.
Now, the White House also announced that President Trump would hold a press conference on auto tariffs after the close, which weighed on the overall mood. Now, president Trump did announce 25% tariffs on all autos assembled outside of the United States, which according to S&P Global, would be nearly half of the cars sold last year. Now, when discussing next week's Liberation Day, President Trump said that reciprocal tariffs will be lenient, though that will be in the eye of the beholder.
Now, the announcement has hit automakers both stateside and around the globe, but overall markets have taken the announcement in stride. It is still pretty early, but major indices have recouped the overnight losses and are hovering around unchanged, up about 1% for the week. Now, these tariffs have been discussed for some time, so it was not a complete surprise. Heading into next week, the market still seems to be taking the view that President Trump wants trade partners to play ball.
Now, outside of the tariff headlines, it has been a bit quieter this week. The economic data continues to come in better than the survey data and the prevailing narrative. Durable goods orders bounced back after falling last month. This week's initial claims data held steady and continuing claims pulled back to 1.85 million from 1.89 million last week. Now, before we close out the week, there is another round of important economic data, including personal income and spending and PCE, the Fed's preferred gauge of inflation.
Now, looking ahead to next week, it is the end of Q1 with traders on the lookout for some pension and portfolio rebalancing given the strength in treasuries and equity weakness to start the year. Next week's economic data includes the ISM surveys and the Labor Market data, capped off with the BLS employment report on Friday.
Now clearly, the biggest event of the week is Liberation Day on Tuesday. So once again, thank you for spending some time with us today on this episode of the agony and ecstasy of sports and finance, I mean, Market Storylines. Remember, you can always watch on tv.nyc.com or our YouTube channel, or listen every Friday on the Inside the ICE House podcast feed. Thanks for joining me. Enjoy the rollercoaster. I'm Michael Reinking. I'll talk to you again next week.
Speaker 2:
That's our conversation for this week. Remember to rate, review and subscribe wherever you listen, and follow us on X, @IceHousePodcast. From the New York Stock Exchange, we'll talk to you again next week, Inside the ICE House.
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.