MarketLens
Market Overview
The S&P 500 and Nasdaq rebounded this week, jumping to near all-time highs. Investors maintained confidence surrounding the markets this week despite President Trump’s announcements to impose reciprocal Tariffs.
Economic Insights You Need to Know
Inflation measures came in higher than expected across the board this week
At an annual rate of 3.0%, consumer inflation remains hotter than expected. Essentials like dairy (+6.1%) and utilities (+4.9%) have seen notable price increases. Car insurance (+11.8%) and transportation costs (+8.0%) are also up. Housing costs, including rent and homeownership expenses, along with dining out, continue to rise by 3-4%. Adding to the concern, the CPI just recorded its sharpest monthly increase since August 2023, climbing 0.5%. After more than three years of inflationary pressure, the trend appears to be picking up speed again.
The situation for producers isn't much better. On Thursday, the Producer Price Index (PPI) reflected its highest level since February 2023, reaching 3.6% in January 2025.
At the start of this year, the hope was that economic focus would shift toward job growth rather than inflation. Markets favor stability, and the baseline expectation for 2025 was a gradual, steady decline in inflation. However, the latest data suggests that perhaps market volatility is here to stay. That doesn’t mean I’m exiting my positions, but moving forward, I’ll be keeping a close eye on President Trump’s tariff policies and the extent of federal spending cuts.
Nonfarm payrolls are decreasing and significantly affecting the tech industry.
Job losses in the U.S. aren’t just affecting retail and construction, the tech sector is also feeling the squeeze. The demand for software developers has dropped 70% since its 2022 peak, largely due to AI-driven efficiencies. Companies are optimizing their workforces (Microsoft just posted record high revenue per employee). Traditional coding roles are fading, and high-skilled engineers are shifting toward more promising industries like AI, aerospace, and autonomous vehicle industries.
Egg prices are hitting record highs.
The avian flu outbreak has led to the euthanization of over 148 million birds in the U.S. Egg prices have skyrocketed, increasing 53% from last January and 15.2% just since December, according to the latest Consumer Price Index. U.S. Former National Economic Council director Kevin Hassett criticized the Biden administration’s response, citing a lack of preparedness and strategy for managing the crisis.
Markets have largely abandoned hopes for early-year interest rate cuts. The Federal Reserve’s next meeting is scheduled for March 19, but the consensus suggests that rate reductions may not come until late 2025.
Stock of the Week: Him & Hers Health Inc.
Hims & Hers Health Inc. (NYSE: HIMS) saw their stock surge 39.88%. The company ran a Super Bowl ad promoting its weight-loss drugs as a cheaper alternative to Wegovy and Ozempic. Hims & Hers is using this temporary opportunity to rapidly grow its customer base, similar to how Uber disrupted the taxi industry. However, once drug shortages are resolved, regulatory restrictions could force the company to change its business model or risk losing market share.
U.S. Business News
OpenAI is developing its own AI chips to reduce dependence on Nvidia, with plans to outsource production to Taiwan Semiconductor Manufacturing Company (TSMC). To bring its custom chip to market, OpenAI may invest $500 million or more in development and production.
Elon Musk has made a $97.4 billion bid to acquire OpenAI through his AI company, xAI, creating further tension between him and Sam Altman. The bid comes as OpenAI transitions from a nonprofit to a for-profit structure, requiring it to buy its own assets from the nonprofit entity, and Musk is attempting to set the market value. The move has backing from notable figures like Palantir’s co-founder Joe Lonsdale and Endeavor CEO Ari Emanuel. Altman dismissed the offer and stated that OpenAI is not for sale.
Shares of Tesla dropped 6% Tuesday after news broke that Chinese EV company BYD plans on partnering with DeepSeek on AI technology.
U.S. Steel and Cleveland-Cliffs saw their stock prices jump this week after the U.S. removed tariff exemptions for Canada, Mexico, and the EU. This means all steel and aluminum imports will now face tariffs. This has driven up demand for U.S.-made steel, benefiting domestic companies. However, industries that rely heavily on steel, such as automakers like GM and Ford, will likely face higher production costs.
Microsoft plans to partner with Anduril Industries to enhance the U.S. Army’s Integrated Visual Augmentation System (IVAS) program, pending Department of Defense approval. Anduril will take charge of manufacturing, hardware and software development, and delivery schedules while designating Microsoft Azure as its preferred cloud provider for IVAS-related workloads. The IVAS system integrates augmented and virtual reality into soldier-worn devices to enhance combat awareness.
Airbnb beat earnings and revenue estimates, reporting a 12% increase in nights and experiences booked year over year. The company generated $17.6 billion in gross bookings and is expanding beyond home rentals with new offerings like its co-hosting network. Airbnb plans to invest $200–$250 million into new ventures this year. Investors reacted positively, with shares rising more than 14% after the earnings report.
Hertz reported a $2.9 billion loss in 2024 due to its struggling EV strategy and is now selling off 30,000 electric vehicles.
Dutch Bros stock is surging after the company beat earnings estimates, with revenue growing nearly 35% year over year. In 2024, they added 156 new locations in the U.S., and same-shop transactions saw their highest growth in two years at 2.3%. Originally a West Coast drive-through coffee chain, Dutch Bros has been expanding rapidly, especially in states like Texas. Investors are loving their earnings report , with shares up more than 26%.
Coca-Cola gained 7.27% this week after reporting a 2% increase in sales volume and a 9% price hike across its products.
McDonald’s reported their worst U.S. sales decline since the pandemic. U.S. same store sales fell by 1.4% while sales outside the U.S. were up 0.4%. The stock jumped 2.16% over the past five days.
Overseas Updates
Donald Trump has announced a plan to introduce reciprocal tariffs on countries that impose unfair trade policies on the U.S. Potential targets include Brazil, India, Japan, Canada, and the EU. His administration is working on country-specific tariffs targeting nations that have high levies, strict regulations, or subsidies that Washington deems unfair. The U.S. plans to first review trade deficits with countries like Mexico and China before finalizing the tariffs. The graph below shows the extent of large trade surpluses with the U.S.
President Donald Trump announced that he had a conversation with Russian President Vladimir Putin, during which they agreed to start immediate negotiations to end the war in Ukraine.
Trump stated that he and Putin would work closely together, including visiting each other’s countries. He assigned a team, including Secretary of State Marco Rubio and National Security Advisor Michael Waltz, to lead the peace talks, and planned to inform Ukrainian President Volodymyr Zelenskyy. Trump has repeatedly stated that the war would not have started under his presidency and vowed to bring it to an end if re-elected.
Trump later spoke with Zelenskyy, who also expressed interest in peace talks. He mentioned that a meeting would take place in Munich, led by U.S. officials, to advance negotiations. Trump also thanked Putin for the release of American Marc Fogel, who had been imprisoned in Russia, and expressed hope that these discussions would lead to a resolution of the conflict.
The U.S. military is warning that China’s large-scale exercises near Taiwan could soon be used as a cover for an actual attack.
Admiral Samuel Paparo, the top U.S. commander in the Indo-Pacific, stated that China’s maneuvers are not just drills but rehearsals for forcibly uniting Taiwan with the mainland. He spoke at the Honolulu Defense Forum and also emphasized growing cooperation between China, Russia, and North Korea, calling them a "triangle of troublemakers."
Paparo pushed the need for the U.S. to strengthen its military readiness in the region and warned that weapon stockpiles are running low and maintenance backlogs are growing. He urged for faster adoption of AI and unmanned systems to enhance early warnings and defense capabilities.
News in Sports
PGA
The Genesis Invitational at Torrey Pines
NFL
The Philadelphia Eagles are the 2025 Super Bowl Champions, defeating the Kansas City Chiefs 40-22.
NBA
Western Conference Standings: Oklahoma City Thunder, Memphis Grizzlies, Denver Nuggets
Eastern Conference Standings: Cleveland Cavaliers, Boston Celtics, New York Knicks
Closing Remarks
Financial markets are closed on Monday in observance of President’s Day.
Gold is currently outperforming the S&P 500 over the last 5 years.
Meta closed in the green for an 18th consecutive day, setting a record among the Magnificent 7 stocks.
The U.S. government lost $85.3 million making pennies last year.
Stay with us for more insights next week.
Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
Ashlyn Haringa