Incoming data continue to indicate the economy is slowing, particularly at the all-important consumer level. But, after a volatile week, market participants may have eased into a more methodical approach to discounting the present value of future cash flows.
"The slowdown in the economy suggested by a handful of recent data releases is not terribly convincing," writes Steven Ricchiuto, chief U.S. economist at Mizuho Securities USA, "even though there is a heightened degree of uncertainty in the wake of the new administration's tariff, immigration, and efficiency initiatives."
Ricchiuto argues "the extent of the slowing … seems fully consistent with the residual seasonal bias evident early in each year since the great financial crisis."
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According to Jeff deGraaf, chief investment officer at Renaissance Macro Research, "People are more bearish than the market's performance can explain, and that tends to be bullish."
At the closing bell, the Dow Jones Industrial Average was up 0.9% at 41,841, the S&P 500 was 0.6% higher at 5,675, and the Nasdaq Composite had gained 0.3% to 17,808.
Nvidia is down again
Nvidia (NVDA) was the worst performer among the 30 Dow Jones stocks on Monday, giving back 1.8% after posting a 5.3% rally on Friday.
Nvidia's annual GTC AI Conference opened on Monday. CEO Jensen Huang will make his keynote address on Tuesday at 1 pm Eastern Standard Time.
Huang is expected to introduce the Blackwell Ultra chip and the Rubin GPU platform. Analysts will listen closely for commentary on Nvidia's ability to ramp up production of its new Blackwell systems.
"If Nvidia could highlight real-world data center deployments of GB200 NVL72, underscore the upgrade advantages from B200 to B300, and clarify the B300 production timeline," notes TF International Securities analyst Ming-Chi Kuo, "it could sharpen market expectations for the B300 investment thesis."
On Wednesday, Nvidia will host its first-ever Quantum Day at GTC. The AI stock is down 9% since it announced fiscal 2025 fourth-quarter results on February 26.
Sales, manufacturing disappoint
The Census Bureau reported on Monday that retail sales were up 0.2% in February, less than a third of the FactSet-compiled 0.7% consensus forecast. And the decline in sales in January was revised from 0.9% to 1.2%.
"The fact that this modest bounce comes on the heels of the downward revision makes it all the more disappointing," write Wells Fargo economists Tim Quinlan and Shannon Grein. "The key thing to understand in today's report," write Quinlan and Grein, "is that last month's sales figures were revised sharply lower."
As Quinlan and Grein note, with concern about consumer spending "bubbling up at a more rapid pace in recent weeks" – the downward revision January's monthly decline is the biggest one since 2021.
According to Neil Dutta, head of economics at Renaissance Capital Research, "Consumers are cutting back on their discretionary purchases." Over the last three months, restaurant sales have declined by 8.5% at an annual rate, the weakest pace since early 2022, while grocery store sales have increased by 6.2%, the fastest pace since November 2022.
"When households spend more dining out relative to dining in," Dutta explains, "it is a sign of optimism. When the opposite is true, I'd be more concerned."
Meanwhile, the New York Fed's Empire State Manufacturing Survey revealed a significant slide in business activity in March, with the general business conditions index falling 26 points to -20 from 5.7 in February.
According to Richard Dietz, an economic research advisor at the New York Fed, "Input price increases climbed for a third straight month to hit their fastest pace in more than two years." Dietz also noted that "supply availability is expected to contract, and firms continued to grow less optimistic about the future business outlook."
This week's Fed meeting is a big one
"The big news this week is the Federal Open Market Committee (FOMC) statement and an updated 'dot plot'," says Louis Navellier of Navellier & Associates.
The "dot plot" is a chart the Fed publishes once a quarter. It shows where each member of the FOMC expects things such as interest rates, inflation and gross domestic product to be over the next few years. The next Fed meeting begins on Tuesday and concludes on Wednesday with the release of a policy statement at 2 pm EST.
Fed Chair Jerome Powell will follow up with a press conference at 2:30 pm.
Navellier expects the dot plot "to signal two more key interest rate cuts this year," though he suspects "a minority of FOMC members will also be signaling three key interest rate cuts."
Note that we're tracking news and analysis ahead of the FOMC meeting on our live Fed blog. We'll also track Chair Powell's press conference.
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