Market Commentary Archives

by Jared Plotz, Director of Research

It was another week of sideways action for major markets. Stock indices did move upwards early in the week on hopes for narrower tariff actions as well as some better economic data. But indices were dragged lower as optimism faded amidst softer confidence readings and tougher tariff rhetoric. The S&P 500 declined -1.5% this week, while the Nasdaq fell -2.6%. The 10-Year Treasury yield, an interest rate indicator, closed the week unchanged at 4.25%, as was the 6-Month US Treasury, a favorite of our US Treasury strategy, which ended the week at 4.22%.

“Hard” economic data remained resilient this week. Final Q4 GDP was revised up to 2.4%, from 2.3% prior. Pending home sales, March’s PMI Composite, durable goods orders, and unemployment claims were all better than expected. “Soft” economic data continues to drift lower. March consumer confidence and consumer sentiment both weakened further. Also, PCE inflation was slightly hot. This dynamic speaks to the continued strength of the economy, but also building worries due to tariffs and other policy unknowns.

The Trump administration is slated to announce additional tariffs on trading partners next week. The degree they do so remains in the air, and this uncertainty is a daily pressing item for markets. It seems likely that policy is tightening on autos, lumber, semiconductor chips, aluminum, and pharmaceuticals. An additional 25% tariff is already set for all automobiles produced outside the US. The rate will initially begin at 2.5% but ramp to 25% over time. This is a major blow to Asian automakers, while Mexico is trying to get some preferential treatment. “Reciprocal” tariffs on other major trading partners, including the EU and Japan, will be clarified next week.

Next week brings job openings (JOLTS) data for February on Tuesday, as well as the ISM manufacturing reading. Then on Friday, we will get the March employment report. Expectations are for 125,000 jobs to have been added last month, with the unemployment rate ticking up to 4.2%.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss.

Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors at www.ullandinvestment.com or 612.312.1400.

by Jared Plotz, Director of Research

Investors don’t feel as comfortable as they felt last year, but equity markets held steady this week as participants considered whether the recent pullback was “enough.” Reflecting on the proposition of continued – albeit slower – economic and earnings growth, we view the recent pullback as a symptom of heightened uncertainty, not necessarily the underpinnings of an end to the bull market (when stocks decline 20% from their recent high). Periods of uncertainty are common features of equity markets, and 10% market corrections have happened in more than half of years, historically.

The S&P 500 climbed +0.5% this week, while the Nasdaq rose +0.2%. Meanwhile, the 10-Year Treasury yield, an interest rate indicator, closed at 4.25%, up +3 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -5 bps at 4.22%.

Retail sales rose less than forecast in February (+0.2% m/m); however, the subset that feeds into U.S. GDP did much better than expected (+1.0% m/m). Regional manufacturing reports from New York and Philadelphia showed conflicting directions of activity. While February existing home sales and housing starts both saw marked improvement, homebuilder Lennar outlined a more cautious outlook for housing activity. They noted that high mortgage rates and challenges around down payments were more of a headwind than lumber inflation pushing up prices.

On Wednesday, the Federal Reserve kept their benchmark rate unchanged. Their economic forecasts were revised unfavorably (lower growth with less of a reduction in the rate of inflation). Committee members noted that uncertainty has picked up due to unknown trade impacts, which could cause further unfavorable revisions. The Fed suggested the economy remains in a good place based on “hard data,” and that they could afford being patient until greater clarity comes. They still are aiming for two rate cuts this year, two more next year, and a final cut in 2027. This algins with our view calling for a Fed Fund Rate of 3.50% in the next 24-36 months. Fixed income securities would welcome such moves.

Next week brings flash (preliminary) readings of economic activity (PMI) for March on Monday. Some additional housing data hits mid-week, along with the revised (second) estimate of Q4 GDP. Then the index for personal spending/income (PCE) will come out Friday, as will a revised measure of consumer sentiment. All these metrics feed into views of how consumer and business activity may be evolving during this time of policy uncertainty.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss.

Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors at www.ullandinvestment.com or 612.312.1400.

by Jared Plotz, Director of Research

Equity markets bounced higher on Friday, concluding another volatile week that saw the S&P 500 end Thursday in correction territory (i.e. down >10% from its recent peak, in February). We anticipate the first half of 2025 to exhibit greater volatility than seen the last couple years and we continue to make portfolio changes that we think will be beneficial in a choppier environment. We have highlighted to clients during portfolio reviews that a 10% intra-year correction is not uncommon, and is in fact normal. The S&P 500 declined -2.3% this week, while the Nasdaq slid -2.4%. Year to date, the S&P 500 is down a little over 4%.

The 10-Year Treasury yield, an interest rate indicator, closed at 4.32%, rising +1 bp from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended unchanged at 4.24%. As some concerns have surfaced regarding GDP growth and consumer spending amidst economic unknowns, fixed income markets have begun assuming additional Fed rate cuts down the line. Such cuts to short-term rates typically benefit fixed income securities.

US economic data was soft this week. Small business optimism fell in February, though it remains above average. Consumer (CPI) and producer (PPI) inflation rates for February both slowed slightly versus January. And consumer sentiment (as measured by the University of Michigan) fell to 57.9 from 64.0 the prior month, with “uncertainty” noted as on the rise.

Uncertainty seems to be the key word of this past month. This earnings season, over half of the S&P 500 companies mentioned tariffs on their conference calls. The war in Ukraine continues, with hopes for a ceasefire seesawing this week. And the US Senate negotiated into the final possible day on a continuing resolution for federal spending that would avoid a government shutdown – a deal that is expected to be reached by midnight.

Looking ahead to Monday next week, retail sales for February will be reported by the Census Bureau. These figures could provide a glimpse of any early impacts from the drop in consumer confidence in recent weeks. On Wednesday, the Federal Reserve will host a press conference following the conclusion of their two-day policy meeting. No change to benchmark rates is expected, but investors will listen for changes to the medium-term outlook. We will also get a slew of housing data points for February next week, including the NAHB Housing Market Index, building permits, housing starts, and existing home sales. Coincidentally, earnings metrics and commentary from home builders Lennar and D.R. Horton are on the docket. In light of the pending tariff hikes on Canadian lumber, executives may share cautious outlooks.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss.

Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors at www.ullandinvestment.com or 612.312.1400.

by Jared Plotz, Director of Research

Trade uncertainty continues to roil the markets, acting as an overhang on the economy. New tariffs on key US trade partners did in fact go into effect on Tuesday, but by Thursday the administration had granted a one-month reprieve to Mexico and Canada for USMCA-compliant goods and services, including automobiles and agricultural products. Currently, around half of imports from these countries are compliant, though Mexico aims to boost compliance to 85-90% in coming weeks.

While the tariff postponement for goods that fall under USMCA (the US-Mexico-Canada agreement that replaced NAFTA in 2020) provides some immediate relief, it appears the daily jockeying is taking a toll. Business activity, and various corporate commentaries, suggests an increasingly cautious “wait and see” approach to orders and capital spending. Investor, consumer, and corporate sentiment have all softened to varying degrees. A major question is whether such jockeying is merely a negotiating tactic or more permanent trade policy. It may be a bit of both. More and more, it appears the administration is willing to inject some short-term pain on the inflation front to achieve its long-term economic goals.

We would note consumer spending remains generally healthy (in fact, Costco said quarterly sales grew 9% y/y, including in February), despite recent weakening in sentiment and pressures within some cohorts. Any slowing on the corporate side is also coming off robust levels. If the overhang can lift over the coming two quarters, and as the trade picture becomes clearer, spending and investments should accelerate. In the meantime, volatility may remain high. The S&P 500 declined -3.1% this week, while the Nasdaq slid -3.5%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.31%, rising +9 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -3 bps at 4.24%.

Manufacturing activity remained in expansion territory in February (but was down from January levels), while the pace of services activity picked up sequentially. Friday’s jobs report wasn’t a big needle mover; the 151,000 jobs added in February and the 4.1% unemployment rate were better than feared. Broadcom’s stock jumped on Friday, with management highlighting upside within AI networking products and noting two new AI customers. Meanwhile, CrowdStrike’s stock fell Wednesday due to disappointing first-quarter guidance, overshadowing a beat of fourth-quarter expectations.

Next week brings a string of important economic data points. On Tuesday, the NFIB Small Business Index for February will be released, as will job openings (JOLTS) for January. CPI inflation for February will come on Wednesday, with PPI inflation on Thursday. Both rates of inflation growth are expected to tick 10 bps lower sequentially. On the corporate front, Oracle and Adobe are among the larger companies reporting quarterly results, and they should provide some color on AI developments in software.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss.

Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors at www.ullandinvestment.com or 612.312.1400.