The Monthly Market Wrap provides an insightful analysis of treasury yields, fixed income performance, mega-cap stocks, and key economic indicators in February 2025. It also delves into housing market data and the performance of commodities.
Key Stock Market Index Performance
Domestic stock indices turned negative in February as ex-U.S. indices posted positive performances. The S&P 500 fell 1.3%, the Dow Jones Industrial Average slipped 1.4%, and the Nasdaq Composite tumbled 3.9%. Emerging Markets added 0.5%, and Developed EAFE Markets logged a 2% gain.
The two consumer-related sectors were at the highest and lowest ends of the returns spectrum in February. Consumer Staples rose 5.2% in February, and Consumer Discretionary fell 7%. Six of the 11 total sectors were positive in February.
Economic Data
Employment
The unemployment rate fell to 4.0% for the first time since May 2024, while the labor force participation rate inched higher by one-tenth of a percentage point to 62.6%. Nonfarm payroll data showed that the U.S. economy added 143,000 jobs in January, falling short of the expected 175,000 figure.
Inflation vs. Fed Funds Rate
The US inflation rate rose to 3.00% in January, reaching this level for the first time since May 2024. Core inflation stayed roughly the same, clocking in at 3.26%. The US Consumer Price Index rose 0.47% month over month, and US Personal Spending contracted for the first time since March 2023.
The Federal Reserve maintained its key Fed Funds Rate target range of 4.25%-4.50% at the FOMC’s January 29th meeting. The next meeting will take place March 18-19th, where investors anticipate the Fed Funds Rate to remain unchanged, according to the CME FedWatch tool.
Housing Prices and Mortgage Rates
US New Single-Family Home Sales plummeted 10.5% MoM in December, and Existing Home Sales also slipped 4.9% MoM. The Median Sales Price of Existing Homes fell for the sixth time in the last seven months to $396,900, falling below $400,000 for the first time since March 2024. Mortgage rates came down slightly as well; the 15-year Mortgage Rate ended up at 5.94% in the last week of February, while the 30-year settled at 6.76%.
Manufacturing and Services
The US ISM Manufacturing PMI fell by 0.6 points in February but remained in expansion territory at 50.30. The Services PMI declined 1.2 points between December and January, bringing its latest reading down to 52.80. The YoY US Producer Price Index rose to 3.51% in January, while US Retail and Food Services Sales MoM contracted -0.88% between December and January.
Gold Stays Afloat, Bitcoin Plummets
The price of gold surged as much as 4.4% in February but ended the month 0.8% higher MoM, finishing February at $2,834.60 per ounce in US Dollars. The prices of major cryptocurrencies plummeted in February. Bitcoin sank 19.2% in February to $84,709.14, and is now 20.2% off of its all-time high.
Fixed Income
Yields on mid to long-term Treasury instruments fell in February while shorter-term yields remained largely unchanged month over month. The decline in longer-term yields helped push bond funds higher, including the iShares 20+ Year Treasury Bond ETF (TLT), which advanced 5.7% in February.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.