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In this brief market report, we will take a look at the various asset classes, sectors, equity categories, ETFs, and stocks that moved the market higher, as well as the market segments that defied the trend by moving lower. Identifying these pockets of strength and weakness can often allow us to see the direction of significant money flows, along with their origin.

The Market Is Having a Tariff Tantrum

As tariffs - real or threatened - ratcheted up, and weakness in consumer spending, employment, and earnings estimates took hold, investors pulled back from equities and sought safety in cash, gold, and Treasury bonds. The market was down 3.1% for the week and down 2.9% year-to-date. We are now back to where we started on election day in November 2024.

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A Look at Monthly Returns

This next chart illustrates the monthly returns for the past year. After a weak showing in February, March has been 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 -6.1%, following the new high made on Feb. 19. I think we're due for a 10% correction sometime this year.

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A Look at the Bull Run Since it Began Last October

This next chart highlights the 61.3% gain in the S&P 500 from the October 2022 low through last Friday's close. It appears to be well below the trendline, and it seems that there may be further to go on the downside before this pullback is over.

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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 Oct. 12, 2022 low for additional context.

The best-performing asset class last week was Volatility, which should surprise no one. The worst performer was the small-cap Russell 2000 index. It looks like China and Europe are still doing well.

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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 healthcare and consumer staples, while selling financials and consumer discretionary 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 last week were non-US stocks, both developed and emerging. Investors raised cash by selling the Magnificent 7 group and other growth stocks.. 

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The S&P Mag 7

Here is a look at the 7 mega-cap stocks that have been leading the market over the past two years. These stocks are off to a weak start year-to-date. Faith in the AI trade is being tested. Participation in the bull market has broadened on a year-to-date basis. Tesla (TSLA) was hit the hardest, with Nvidia (NVDA) not far behind. 

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The Mag 7's Dominance is a Drag on Performance

After leading the market higher for the last two years, the Magnificent 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 4.0% year-to-date.

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The 10 Best-Performing ETFs from Last Week

The two biggest winners this week, Eurozone Equity (EZU) and Europe Financials (EUFN), demonstrate how market leadership is changing in 2025. 

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The 10 Worst-Performing ETFs from Last Week

Leisure & Entertainment (PEJ) was one of the best market segments last year, and now it has become a source of funds. Regional Banks (KRE) sold off hard, as did Brokers-Exchanges (IAI).

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Best-Performing Stocks

Middlesex Water (MSEX), a regulated utility, got a boost from an increase in the rates it charges to residential and industrial customers in New Jersey, Pennsylvania, and Delaware.

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Worst-Performing Stocks

Sleep Number (SNBR) beat their earnings numbers, but they fell short on revenue. Analysts have been trimming forecasts as a result.

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Final Thoughts

To recap, in the week just past, investors were doing the following:

• Selling stocks, and buying bonds and gold
• Selling small-caps, and raising cash
• Selling leisure & entertainment, and buying consumer staples
• Selling growth stocks, and buying value stocks
• Selling US stocks, and buying foreign stocks
• Selling the Magnificent 7, and buying other large-caps

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