In this brief market report, we look at the various asset classes, sectors, equity categories, ETFs, and stocks that moved the market higher and the market segments that defied the trend by moving lower.
Identifying the pockets of strength and weakness allows us to see the direction of significant money flows and their origin.
The tariff tantrum continues.
As tariffs - real or threatened - ratchet up, and weakness in Consumer Spending, Employment, and earnings estimates take hold, investors continued to pull back from equities and seek safety in Cash, Gold and Treasury bonds. The market was down 2.3% for the week and down 4% YTD. We are now below where we started on election day in November 2024.
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A look at monthly returns.
This chart shows the monthly returns for the past year. After weak showing in February, March is off to an even weaker start.
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A look at drawdowns this year.
Here is a closer look at the pullbacks we've had over the last 12 months, using a drawdown chart. The current drawdown is -8.2% after reaching correction territory on Thursday and bouncing back on Friday.
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A look at the bull run since it began last October.
This chart highlights the 57.6% gain in the S&P 500 from the October 2022 low through Friday's close. We are well below the trendline and it looks like we may have further to go on the downside before this correction is over.
Major asset class performance.
Here is a look at the performance of the major asset classes, sorted by last week's returns. I also included the returns since the October 12, 2022 low for additional context.
The best performer last week was Precious Metals, as both gold and silver benefitted from the flight to safety trade. The worst performer was Volatility, as the VIX index pulled back sharply with Friday's rally.
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Equity sector performance
For this report I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us added granularity as we survey the winners and losers.
Investors were buying defensive sectors like Utilities and Defense Contractors while selling Transportation and Retail stocks.
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Equity group performance
For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.
The best performing groups for two weeks in a row were non-US stocks, both Developed and Emerging. Investors raised cash by selling the Mag 7 and other Growth stocks.
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The S&P Mag 7
Here is a look at the seven mega-cap stocks that had been leading the market over the past two years. These seven stocks are off to a weak start YTD. Faith in the AI trade is being tested. Participation in the bull market has broadened on a year to date basis. Apple (AAPL) was hardest hit while NVDA rallied after being down nearly 30% peak-to-trough.
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The Mag 7 dominance is a drag on performance.
After leading the market higher for the last two years, the Mag 7 are now a drag on the S&P 500 index on a year-to-date basis. The other 493 stocks in the S&P 500 are up an average of 1.6% YTD.
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The 10 best performing ETFs from last week
The two biggest winners this week - Natural Gas and Gold Miners - demonstrate how market leadership is changing in 2025. Energy stocks are holding up better than expected and Gold Miners are benefitting from the flight to safety trade.
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The 10 worst performing ETFs from last week
Once again we find Cannabis at the top of the list of worst performers.
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Best Performing Stocks
MP Materials (MP) is a producer of rare earth materials. The company owns and operates the Mountain Pass Rare Earth Mine and Processing Facility, the only rare earth mining and processing site of scale in North America.
Worst Performing Stocks
Modivcare (MODV) is now changing hands at $2.30 per share. In 2021, investors were paying $210 per share.
Final thoughts
To recap, in the week just past, investors were:
- Selling Volatility and buying Gold
- Selling Transportation stocks and buying Energy
- Selling Retailers and buying Utilities
- Selling Growth and buying Value
- Selling US stocks and buying Foreign stocks
- Selling the Mag 7 (except NVDA) and building cash positions