US Stock Weekly Report

2026-03-30

Previous Week’s Market Review & Analysis

Macroeconomic Landscape: The week saw the release of several key economic indicators for February and Q4 2025. February Consumer Price Index (CPI) held steady at 2.4% year-over-year (y/y), with core CPI at 2.5% y/y. Energy prices rebounded, contributing to inflation concerns. The Producer Price Index (PPI) for February rose 0.7% month-over-month (m/m) and 3.4% y/y, with core PPI increasing 0.5% m/m. Q4 2025 GDP (annualized, second estimate) was revised downward to +0.7%. The unemployment rate for February stood at 4.3%, with nonfarm payroll employment increasing by 130,000. Initial jobless claims were 210,000, and continuing jobless claims totaled 1,819,000. Preliminary March S&P Global Composite PMI was 51.4, with Services at 51.1 and Manufacturing at 52.4. The Federal Reserve maintained the federal funds target rate at 3.50%-3.75%, with Chair Powell acknowledging stalled inflation progress and projecting 2026 Personal Consumption Expenditures (PCE) at 2.7%. Geopolitical tensions in the Middle East, particularly involving Iran, continued to weigh on markets and led to Brent crude prices nearing $110 per barrel, though a brief easing occurred Monday on talks of de-escalation.

Market Performance Overview: The week experienced significant volatility. On Monday, March 23, major US indices rallied, with the S&P 500 rising 1.1% to 6,581, the Dow Jones Industrial Average gaining 1.4% to 46,208.47, and the Nasdaq Composite climbing 1.4% to 21,946.76, driven by hopes of reduced Middle East conflict. However, markets slipped on Tuesday as geopolitical tensions resumed, with the S&P 500 falling 0.4% to 6,556.37, the Dow down 0.2% to 46,124.06, and the Nasdaq losing 0.8% to 21,761.89. For the full week ending March 29, the S&P 500 was notably down for the month, largely due to losses in large-cap and "Mag 7" stocks. Sector performance for the week saw Energy, Materials, Utilities, and Consumer Staples outperforming, while Communication Services, including Meta Platforms, experienced sharp declines. Value stocks generally outperformed growth, and small-cap stocks saw gains while large caps faced pressure.

Key Events Analysis: The Federal Reserve's decision to hold interest rates steady was a central focus, alongside Fed Chair Powell's cautious tone regarding persistent inflation. Geopolitical developments, particularly President Trump's temporary announcement of talks with Iran and subsequent denials, created significant intra-week market swings. Corporate news included Meta Platforms dropping 11.5% after a lawsuit loss and Delta Airlines raising Q1 2026 guidance.

Flows & Sentiment: Risk appetite deteriorated throughout the week, leading to increased US equity outflows and a shift of capital into cash and bonds. Hedge funds reduced gross leverage, and real money flowed away from US equities into Japan and European defensives. Consumer sentiment plunged to a three-month low in March, primarily due to inflation worries exacerbated by the Middle East conflict. The VIX index surged 13%, reflecting heightened volatility. Market sentiment for both the S&P and Nasdaq entered "extreme territory" below 20, indicating downside momentum.

Overall Assessment: The market's behavior during the week was characterized by a transition from complacency to instability, driven by the convergence of macroeconomic concerns, particularly inflation and interest rate expectations, with escalating geopolitical risks. Despite signs of a cooling labor market, inflation risks remain a primary concern, contributing to the Fed's cautious stance.

Next Week’s Key Market Drivers & Investment Outlook

Upcoming Events: Key data releases for the upcoming week include the ISM Manufacturing PMI, new PMIs from China, the March employment report for the US, US Weekly Jobless Claims, and the final March US Consumer Sentiment. Several Federal Reserve officials are also scheduled to speak.

Market Logic Projection: Macro conditions are expected to evolve into a complex environment of high energy costs, potentially slowing business activity, and ongoing uncertainty regarding monetary policy. Inflation is projected to remain elevated, possibly bouncing to 3.5% by mid-2026 before declining, with Fed easing not expected until late 2026. Despite macro headwinds, AI infrastructure capital expenditure is largely seen as resilient.

Strategy & Allocation Recommendations: Amid deteriorating risk appetite, a defensive rotation is underway. Energy, especially upstream Exploration & Production (E&P) companies, is favored due to rising oil prices. Utilities are gaining attention as AI infrastructure plays. Investors are advised to consider rotation into Japan and European defensive assets.

Risk Alerts: The primary risk remains the ongoing Middle East conflict and its potential to cause sustained high oil prices, leading to increased inflation and the possibility of stagflation for oil-importing economies. Near-term downside risk persists from the combination of macro factors, geopolitical instability, and the unwinding of market positioning.