U.S. stocks rallied for a second consecutive session on Monday as investors sought bargain opportunities following a sharp market correction. The Nasdaq and S&P 500 had tumbled for four straight weeks, prompting investors to reassess economic indicators and the impact of Trump administration policies.
Retail sales showed a marginal recovery in February but fell short of analyst expectations, highlighting growing concerns over tariffs and widespread federal job cuts. Additionally, a separate report revealed that New York State’s manufacturing activity declined at its steepest rate in nearly two years.
Retail Sales and Market Performance
Retail sales edged up slightly in February, with most of the gains driven by online purchases. However, concerns persist about consumer sentiment amid economic uncertainty.
“The only noticeable rebound in spending came from online sales, likely due to stocking up ahead of tariffs,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Consumer sentiment is a poor predictor of actual spending, and the optimism that previously fueled expenditures has largely faded.”
The stock market responded positively, with major indexes showing gains:
- The Dow Jones Industrial Average (.DJI) rose 353.44 points (0.85%) to close at 41,841.63.
- The S&P 500 (.SPX) climbed 36.18 points (0.64%) to 5,675.12.
- The Nasdaq Composite (.IXIC) advanced 54.58 points (0.31%) to 17,808.66.
Housing Market and Federal Reserve Expectations
In the housing sector, U.S. homebuilder sentiment dropped to its lowest level in seven months, reflecting increased construction costs due to tariffs on imported materials. Industry experts warn that rising costs could slow down new home developments.
Meanwhile, all eyes are on the Federal Reserve’s policy meeting on Wednesday, where officials are widely expected to keep interest rates unchanged. According to CME’s FedWatch Tool, the probability of a rate hold remains high. The Fed will also release updated economic projections, offering insights into how policymakers view Trump’s fiscal measures and their potential impact on the broader economy.
Economic Growth and Market Correction
The Federal Reserve Bank of Atlanta revised its first-quarter GDP forecast, now projecting a 2.1% contraction, down from a previous estimate of 1.6% on March 7. Analysts attribute this decline to weak consumer spending and slower business investment.
Despite recent market volatility, investors saw buying opportunities on Friday, with many seeking stocks that could benefit from Trump’s policies. Over the past month, the S&P 500 has dropped more than 10% from its February peak, signaling an official market correction. However, some analysts believe that recent rebounds could indicate a stabilization phase.
As market participants await the Fed’s next move, experts emphasize the importance of closely monitoring economic indicators. “If inflation remains under control and the job market stabilizes, we could see a more sustained recovery in equities,” noted Jacobsen.
