The US equity markets continued to be pressured by tariff and economic growth uncertainties during the week ending March 7. Weakness was most pronounced in the mid- and small-caps, the growth index, along with the energy, materials, and information technology sectors, notes Sam Stovall, chief investment strategist at CFRA Research.
All sizes, styles, sectors, and nearly three-quarters of the S&P Composite 1,500’s 155 sub-industries posted declines. In addition, the S&P 500 slipped into pullback mode (a decline of 5% to 9.9%) on March 4 and ended Thursday just 0.1% above its 40-week (200-day) moving average. That is considered by many as an important investor sentiment support level.
The limited bright spots in the past week came from the international developed and emerging markets. The US dollar index slipped and investors decided it best to temporarily sidestep the tariff turmoil by rotating into those areas that have underperformed the S&P 500 in 12 of the last 15 years.
How long this period of investor caution persists depends on how quickly it will take the global trade clouds, and the resulting threat of recession, to dissipate. As of March 7, a slight majority of sectors in the S&P 1,500 continued to trade above their 40-week moving average, with leadership found in the communication services, consumer staples, and financials sectors.
Finally, last week saw a downtick in the percentage of the 155 sub-industries in the S&P 1,500 trading above both their 10- and 40-week moving averages to 29% after peaking near its long-term average of 48%.
