Financial insights for the week ending February 21, 2025
For the week ending February 21st, the S&P 500 fell by 1.66%, the NASDAQ was down 2.51%, and the Dow Jones Industrial Average also fell by 2.51%.
Markets faced a sharp selloff this past week as investors reacted to a mix of weak economic data, corporate earnings disappointments, and policy shifts from the Trump administration. Walmart (Ticker: WMT), often considered a bellwether for consumer sentiment, tumbled 9% this week after issuing a weaker-than-expected profit forecast, raising concerns about a potential slowdown in consumer spending in the coming months. Policy uncertainty further rattled investors as the White House implemented job cuts across multiple government agencies, including the immediate layoff of 5,400 probationary workers at the Pentagon, with plans to reduce its civilian workforce by 5% to 8% in the near future. Additionally, the administration has proposed an 8% annual reduction in military spending over the next five years. The risk-off sentiment intensified Friday morning after the Senate passed a border security bill, which excluded a key $4.5 trillion tax cut that the market had been hoping for and that the White House had aggressively pushed for. With Republicans holding only a narrow majority in Congress, budget hawks successfully blocked the tax cuts, citing concerns over growing national debt levels. The White House proposed using savings from the Department of Government Efficiency (DOGE) cuts and tariff revenue to offset the cost of the tax cuts, but those efforts failed to gain traction (yet). Overall, the market experienced a broad risk-off shift, with high-flying stocks—previously considered overvalued—suffering steep declines as investors turned defensive.
Next week, the market will continue to digest policy changes from the Trump administration, but this week’s focus may be on Nvidia (NVDA), a dominant supplier of the microchips fueling the global artificial intelligence boom. On Wednesday, Nvidia reports its quarterly earnings, a key event as the global AI industry has already committed or plans to invest over $1 trillion. This massive investment, combined with a (so far) strong labor market, has been a major force propelling both the economy and the stock market forward these past few years. As the leading AI bellwether, Nvidia's results will be closely watched by investors assessing the sustainability of the AI-driven market rally.
For this week's financial planning tip, we’re talking about diversity—not the kind making headlines in Washington, but the kind that protects your investments! As market risks rise and fall, diversification remains essential. Putting all your eggs in one basket is risky—especially when egg prices are up 50% since January 2025! So unless you’re willing to risk scrambling your portfolio, make sure you’re spreading your investments wisely. Pentagon Job Cuts
Enjoy your day! Come back next Saturday for our latest commentary. We are here to answer any of your financial questions.