From the desks of Stanley Katz & Lauren Madera
WE PRAY FOR THOSE SERVING OUR COUNTRY AND WISH THEM SAFE RETURN HOME. FOR THOSE AT HOME, REMEMBER TO RESET YOUR CLOCKS FOR DAYLIGHT SAVINGS TIME.
Markets closed the week lower (DJIA: -3.01%, S&P 500: -2.02%, Nasdaq: -1.24%), as investors grappled with escalating conflict in the Middle East and surprising economic data. On Monday, investors eagerly awaited financial markets’ reaction to the American and Israeli strikes commencing last weekend on Iran. Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the strikes, triggering Iranian missile and drone responses across the region. Oil prices surged on supply disruption concerns, pushing Treasury yields and the US Dollar higher as investors fled toward safety. The already-negative sentiment compounded Friday with the release of employment data. Nonfarm payrolls declined 92,000 in February compared to expectations of a gain around 60,000. The unemployment rate ticked up to 4.4%, and major U.S. indices closed the week down year-to-date (DJIA: -1.17%, S&P 500: -1.54%, Nasdaq: -3.68%).
Beneath the geopolitical noise lies a consumer story that deserves attention. While services spending remains solid at 3.4% in fourth-quarter, goods spending cratered—down 0.9% for durables and a stunning 3.5% for non-durables from the prior quarter. Argus notes that in the K-shaped economy, lower-income consumers focused on necessities are now being pressured even on those basics. This spending bifurcation helps explain why corporate earnings can grow (powered by AI investments and margin expansion) while growth slows overall. The Supreme Court’s tariff ruling, meanwhile, leaves uncertainty intact; the administration’s alternative legal pathways expire in 150 days, adding another layer of cost pressure for companies navigating an already tight consumer environment.
According to Schwab, the stock market’s internal structure may be flashing warning signals that suggest something more fundamental is shifting. Technology’s dominance is fracturing in a way reminiscent of 1999-2000: hardware and semiconductors are surging while software stocks face an existential reckoning over AI disruption. Schwab’s analysis shows the tech sector’s High-Low Logic Index at record divergence levels—many stocks making new highs simultaneously with many making new lows. Historically, this “out of gear” condition has preceded either a sharp volatility spike or a decisive leadership handoff. Retail trader turnover is hitting cycle highs, indicating that investors aren’t sitting on the sidelines—they’re rotating aggressively. The equal-weighted S&P 500 is already outperforming cap-weighted by 7% year-to-date, echoing the 2000 period when equal-weight actually gained while cap-weighted fell. What happens next depends on whether this rotation stabilizes around new leadership or accelerates into broader weakness.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Argus:
Schwab:
American Century:
Capital Group:
J.P. Morgan Asset Management:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
Source for weekly stock market returns: Barron’s.
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