Daily market snapshot

Published March 14, 2025
 Woman on couch looking at laptop

Friday, 03/14/2025 p.m.

  • Stocks rise on lower chance of a U.S. government shutdown – North American equity markets traded higher on Friday, as risks of a U.S. government shutdown fell following Senate Minority Leader Chuck Schumer's statement that he would support the House-passed bill to extend funding for the government. Leadership favoured growth-style sectors, with information technology and consumer discretionary among the top performers. However, all 11 sectors of the S&P 500 finished the day higher. Overseas, markets in Asia were higher overnight following an announcement that policymakers in China plan to increase support measures to stimulate consumption, providing a boost in sentiment to the region.* European markets closed higher as well on news that policymakers in Germany are making progress on a deal to increase spending on infrastructure and defense to stimulate economic growth.* U.S. bond yields closed higher, with the 10-year U.S. Treasury yield finishing just above the 4.3% mark, while the 10-year GoC yield was little changed at around 3.05%.*
     
  • U.S. government shutdown risks fade – Senate Minority Leader Chuck Schumer stated on Thursday he plans to vote to advance the Republican proposed funding bill to keep the U.S. government open, lowering the risk of a government shutdown. Republicans hold 53 Senate seats and will need 60 votes to prevent a filibuster, meaning support from both parties will be needed. Congress will need to pass a new spending bill by midnight on Friday to prevent a government shutdown, and a final vote is expected later this afternoon. While disruptive, government shutdowns have historically had limited impact on markets. In fact, during the last government shutdown from December 21, 2018 – January 25, 2019, the S&P 500 gained over 10%.* Additionally, the S&P 500 has been positive during each of the past five government shutdowns.* While a government shutdown would add to the recent mix of policy uncertainty, history suggests that the impact from a shutdown is short-lived and that markets tend to look through the uncertainty. Markets responded favourably to the lower probability of a shutdown, with North American equity markets broadly higher on Friday.
     
  • Fed and U.S. consumer in focus for the week ahead – Monetary policy and U.S. consumer-spending trends will be in focus next week, with retail-sales data for February on Monday and the FOMC meeting on Wednesday. Expectations are for the Fed to hold rates steady at Wednesday's meeting. However, with U.S. economic growth showing signs of slowing in recent weeks, markets now expect the Fed to deliver three 0.25% rate cuts in 2025, up from only one last month.** In addition to the interest-rate decision, next week's meeting will provide an update on policymakers economic projections, with investors likely focused on where FOMC members see the policy rate and inflation heading over the rest of the year. On the consumer front, markets will be watching to see whether the softer-than-expected January retail-sales report was a one-off or evidence of slowing consumer spending. Market expectations are for U.S. retail sales to grow by 0.8% in February after sales declined by 0.9% in January.* Despite recent signs of slowing economic growth, we'd view the recent data as more of a mid-cycle adjustment versus heading for a recession. The silver lining to slowing growth is that it could prompt the Fed to lower interest rates more aggressively throughout 2025 than was previously expected, perhaps providing support to the economy and markets.
     

Brock Weimer, CFA
Investment Strategy

Source: *FactSet **CME FedWatch Tool
Government shutdown dates from history.house.gov

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