Market Update
Wall Street saw stocks tumble mostly lower in February after posting strong returns in January. Investors worried about the economic impact of tariffs, inflation, and rising geopolitical tensions. Consumer staples and real estate stocks moved higher last month, while consumer discretionary, industrials, information technology, communication services, and energy underperformed.
According to FactSet, the S&P 500 reported earnings growth of 17.8% in the fourth quarter, the highest growth since the fourth quarter of 2021. However, during earnings conference calls, 221 of the S&P 500 companies mentioned "tariffs." The financial sector reported the highest fourth-quarter earnings growth at 56.9%. Of the S&P 500 companies reporting earnings, 77.0% exceeded earnings per share above expectations, equal to the five-year average. However, 72 S&P 500 companies reported a decline in earnings per share.
Ten-year Treasury yields closed the month falling to the lowest rate in over two months due to concerns that tariffs and government spending cuts may hurt the economy. The two-year note closed February at 4.00%, down roughly 22.0 basis points from a month earlier. The dollar index dipped lower from a month earlier. Gold prices rose in February, despite trending lower during the latter part of the month.
International Markets
In Germany, consumer prices rose 2.3% in February, unchanged from the prior month and in line with expectations. A sharp increase in energy costs helped propel the Eurozone inflation rate to 2.5% in January, the highest it's been since July 2024. Canada's annual inflation rate inched up 0.1 percentage point to 1.9% in January but remained below the Bank of Canada's target rate of 2.0% for the sixth straight month. Many of President Trump's tariffs are proposed as reciprocal in nature, aimed at countries that impose value-added taxes (VAT) on imports. For example, Germany's VAT is 19.0%, France's is 20.0%, Japan imposes a 10.0% VAT, and China has a VAT of 13.0%. At this point, the U.S. does not have a VAT system. In February, the STOXX Europe 600 Index rose 3.0%; the United Kingdom's FTSE advanced 1.4%; Japan's Nikkei 225 Index fell 6.1%; and China's Shanghai Composite Index increased 2.2%.
On A Personal Note
Jeff continued to work on rehabbing his knee. Things are going very well, and he is planning to try out the practice range at the golf course soon. Drew’s oldest made her college choice in February. She will be attending Auburn University in the fall! Chris was able to go to Palm Springs for a golf trip. This is the third year in a row that his group has done this. The weather was beautiful, and it was a nice break from the Ohio winter we had. Lisa and some friends got away for a relaxing weekend to a cabin at Candlewood Lake near Columbus. Sam had a quiet February following his ski trip. He spent a few afternoons trying to get ready for golf season, he has a lot of work left to go.
