Daily market snapshot

Published March 17, 2025
 Woman on couch looking at laptop

Monday, 03/17/2025 p.m.

  • Stocks move higher for a second day – U.S. and Canadian equity markets were higher on Monday, following a strong rebound on Friday. The S&P 500 was up about 0.85%, while the Canadian TSX was up about 1%. Investors were encouraged to see a rebound in U.S. retail sales for February, which climbed 0.2% for the month, after falling 0.9% last month*. Markets will also be awaiting the Federal Reserve interest rate decision this month, with investors expecting the Fed to keep rates steady at 4.25% to 4.5%*. More broadly, after averting a government shutdown on Friday, and now anticipating further tariff developments on April 2, markets are largely in wait-and-see mode in the weeks ahead. This may provide some relative calm in markets after a period of volatility and 10% correction in the S&P 500 since mid-February. 
     
  • All eyes turn to the Federal Reserve – The Federal Reserve will hold its March FOMC meeting on Tuesday and Wednesday this week, with an interest rate decision and updated set of economic projections expected on Wednesday afternoon. In our view, the Fed will likely keep rates on hold at 4.25% to 4.5%, but the key takeaway will lie in the new "dot plot," which shows the best guess of the path of interest rates going forward. In December, the median Fed dot plot pointed to 2 rate cuts in 2025*, and investors will be watching to see if this is updated to reflect potentially 3 rate cuts, in-line with the current market expectation. In December, the Fed also saw U.S. economic growth for 2025 at 2.1% year-over-year*. Given the recent slew of softer economic data, markets will be focused on whether the Fed will downgrade this forecast for the year ahead. In our view, Powell and team will aim to strike a balance, underscoring that the economy and labor market currently remain in good shape, with inflation moving in the right direction, but the uncertainty around policy keeps them on hold until the economic impacts are better known.
     
  • Diversification remains a key theme for 2025 – The Federal Reserve will hold its March FOMC meeting on Tuesday and Wednesday this week, with an interest rate decision and updated set of economic projections expected on Wednesday afternoon. In our view, the Fed will likely keep rates on hold at 4.25% to 4.5%, but the key takeaway will lie in the new "dot plot," which shows the best guess of the path of interest rates going forward. In December, the median Fed dot plot pointed to 2 rate cuts in 2025*, and investors will be watching to see if this is updated to reflect potentially 3 rate cuts, in-line with the current market expectation. In December, the Fed also saw U.S. economic growth for 2025 at 2.1% year-over-year*. Given the recent slew of softer economic data, markets will be focused on whether the Fed will downgrade this forecast for the year ahead. In our view, Powell and team will aim to strike a balance, underscoring that the economy and labor market currently remain in good shape, with inflation moving in the right direction, but the uncertainty around policy keeps them on hold until the economic impacts are better known.
     

Mona Mahajan
Investment Strategy

Source: *FactSet

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