The stock market has sunk near a six-month low as concerns over slowing economic growth and fear of how tariffs could impact the outlook have shaken investor confidence.
Last week, the S&P 500 (^GSPC) fell nearly 2.3% while the Dow Jones dropped 3%, or more than 1,300 points. The tech-heavy Nasdaq Composite (^IXIC) fell about 2.4%. On Thursday, the S&P 500 officially entered a correction as the benchmark index fell 10% from its record high on Feb. 19.
In the week ahead, the Federal Reserve and the health of the US economy will remain top of mind for investors. The central bank is largely expected to hold interest rates steady when it announces its next monetary policy decision on Wednesday. Markets will focus on any clues about when the central bank could cut rates again.
Monday’s release of February retail sales is set to highlight the weekly slate of scheduled economic data releases. On the corporate front, quarterly results from Nike (NKE), FedEx (FDX), and Micron (MU) after the bell on Thursday will be closely tracked.
The recent sell-off in stocks has coincided with growing market fears about slowing economic data, pushing investors to price in roughly three interest rate cuts from the Fed in 2025.
But with inflation still well above the Fed’s 2% target and possible impacts from the Trump administration’s tariffs and other policies potentially boosting price increases further, the Fed is widely expected to leave interest rates unchanged on Wednesday.
Key to watch will be the Fed’s latest Summary of Economic Projections (SEP). That includes its “dot plot,” which maps out policymakers’ expectations for where interest rates could be headed in the future, as well as commentary from Fed Chair Jerome Powell during his press conference.
When the Fed last issued its dot plot in December, the median forecast was for the fed funds rate to end 2025 in a range of 3.75% to 4%, which would reflect two 25 basis cuts this year, one less than market expectations.
Morgan Stanley chief US economist Michael Gapen said that with fiscal policy uncertainty continuing to weigh on the outlook, he expected that the Fed “communicates a heavy dose of patience.”
“Chair Powell is likely to sound cautiously optimistic on the economy, but point to a cloudy outlook since policy uncertainty is high,” Gapen wrote.
The worst retail sales report in a year was one of the first data points that kicked off the market’s rerating of the US economy’s growth outlook over the past month.
