Asset Management Weekly Market Commentary

Market updates for the week ending
March 28, 2025

Key observations

• U.S. stock indices gave back early-week gains to close the week in negative territory as automobile tariffs and elevated February inflation readings weighed on sentiment. Lackluster consumer spending data from February stoked fears of an economic slowdown into the weekend and led to a flight to quality out of stocks and into Treasuries and other safe-haven assets such as gold.
• U.S. stocks associated with the artificial intelligence (AI) theme and the buildout of infrastructure tied to a broader adoption of this technology were noticeably weak as the information technology sector was the biggest laggard on the week, pulled lower by a sharp drop in semiconductor stocks, specifically.
• Treasury yields little changed on the week as selling early in the week pushed yields higher to the top-end of recent trading ranges, a move that brought buyers looking to lock-in higher yields back into the market. ‘Non-core’ fixed income segments such as U.S. corporate high yield, along with developed bonds abroad, provided valuable diversification benefits last week and should continue to do so amid a backdrop of heightened economic and policy uncertainty.

What we're watching

• The Institute for Supply Management (ISM) Manufacturing Index for March is released Tuesday with the reading expected to fall to 49.8 from 50.3 the prior month. The Prices Paid component of the index will be closely watched after rising sharply in February as manufacturers pulled forward demand in anticipation of tariffs being levied in the months ahead. A reading above 50 indicates expansion or growth, while a reading below 50 is indicative of contraction.
• The ISM Services Index for March is released Wednesday and is expected to remain in expansion territory at 53.1, albeit down slightly from the 53.5 reading in February.
• The March Nonfarm Payrolls report is released Friday and 135k jobs are expected to have been created during the month, down from 151k the prior month. The unemployment rate is expected to remain static month over month at 4.1% in March, while average hourly earnings are expected to rise 0.3% month over month, in-line with the February reading.