Financial Market Update – Week of 3/17/2025

Presented by

Marc Aarons

Last week brought heavy news flow out of Washington (shutdown averted!), while monthly inflation data showed some cooling. Amid all of the headlines, now is a good time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

Major U.S. stock market indexes fell decidedly for the week ending 03/14, although they settled the week well off the lows courtesy of a big rally last Friday.

The S&P 500 decreased by 2.27%.
The Nasdaq 100 traded lower by 2.46%.
The Dow Jones Industrial Average fell by 3.07%.
News Flow Heaviness

A potential partial government shutdown was in play last week as major stock indexes touched correction territory, with some heated exchanges among lawmakers on Capitol Hill over the spending bill. However, the Senate passed the spending bill, and the shutdown was averted.

Economic data and Fed talk still flow, yet are buried beneath continuing tariff volatility daily. Perhaps market sentiment reached short-term oversold levels, contributing to last Friday’s rally.

Inflation Cools

It might not seem like it, but there was some good news on inflation last week. Consumer Price Index (CPI) cooled more than expected in February. The data released last Friday showed consumer prices rose by 2.8% vs. 2.9% expected year-over-year; it also showed a 0.2% increase month-over-month vs. 0.3% expected. Good, right? Yet major stock indexes sold off heavily on the data release day, heading higher the following day.

On the wholesale side of inflation, expectations were for an increase in February, and the data showed no change month-over-month, with Core PPI coming in two ticks below expectations on a monthly basis. Inflation cooled on both the consumer and wholesale side in February.

Not-So Golden Consumer

Recent reports indicate that consumers appear to be feeling overwhelmed by inflation and concerns about tariffs. Last week, the University of Michigan Consumer Sentiment data showed the lowest reading since 2022.

Gold has seen its rally continue, with spot gold prices briefly cracking $3,000 per troy ounce on Friday of last week. It has been a heck of a run in the shiny yellow metal for the past year.

The Week Ahead

Remember when the markets were all about the Fed and inflation data? Things have changed quickly in tariff-infused fashion. But this week, we have the March Federal Reserve (Fed) meeting on deck. Expectations are for the Fed to leave rates unchanged, with markets pricing in a cut in June, with only a 31% chance in May as of last week.

Let’s see if the Fed can settle some nerves, given the recent rise in volatility. With the S&P 500 trading close to correction territory, some long-term investors may find opportunities that did not exist just a month ago.

That’s it for this week’s update! As always, if you’d like to discuss any of these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out. I am always here as a resource for you.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission 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 securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

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A  look at some of the ideas contained in the 2017 federal budget. Provided by Marc Aarons

Will workplace retirement plans be altered in the near future? The White House will propose some changes to these plans in the 2017 federal budget, with the goal of making such programs more accessible. Here are some of the envisioned changes.

Pooled employer-sponsored retirement programs. This concept could save small businesses money. Current laws permit multi-employer retirement plans, but the companies involved must be similar in nature. The White House wants to lift that restriction.^1,2

In theory, allowing businesses across disparate industries to join pooled retirement plans could result in significant savings. Administrative expenses could be reduced, as well as the costs of compliance.

Would governmental and non-profit workplaces also be allowed to pool their retirement plans under the proposal? There is no word about that at this point.

This pooled retirement plan concept would offer employees new degrees of portability for their savings. A worker leaving a job at a participating firm in the pool would be able to retain his or her retirement account after taking a job with another of the participating firms. Along these lines, the White House will also propose new ways to make it easier for workers to monitor and reconcile multiple workplace retirement accounts.^2,3

Scant details have emerged about how these pooled plans would be created or governed, or how much implementing them would cost taxpayers. Congress will be asked for $100 million in the new budget draft to test new and more portable forms of retirement savings accounts. Presumably, many more details will surface when the proposed federal budget becomes public in February.^2,3

Automatic enrollment in IRAs. In the new federal budget draft, the Obama administration will require businesses with more than 10 employees and no retirement savings program to enroll their workers in IRAs. This idea has been included in past federal budget drafts, but it has yet to survive bipartisan negotiations – and it may not this time. Recently, the myRA retirement account was created through executive action to try and promote this objective.^1,3

A lower bar to retirement plan participation for part-time employees. Another proposal within the new budget would allow anyone who has worked for an employer for more than 500 hours a year for the past three years to participate in an employer-sponsored retirement plan.²

A bigger tax break for businesses starting retirement plans. Eligible employers can receive a federal tax credit for inaugurating a retirement plan – a credit for 50% of what the IRS deems the employer’s “ordinary and necessary eligible startup costs,” up to a maximum of $500. That credit (which is part of the general business credit) may be claimed for each of the first three years that the plan is in place, and a business may even elect to begin claiming it in the tax year preceding the tax year that the plan goes into effect. The White House wants the IRS to boost this annual credit from $500 to $1,500.^2,4

Also, businesses could receive an annual federal tax credit of up to $500 merely for automatically enrolling workers in their retirement plans. As per the above credit, they could claim this for three straight years.²

What are the odds of these proposals making it into the final 2017 federal budget? The odds may be long. Through the decades, federal budget drafts have often contained “blue sky” visions characteristic of this or that presidency, ideas that are eventually compromised or jettisoned. That may be the case here. If the above concepts do become law, they may change the face of retirement plan participation and administration.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

Citations.

1 – nytimes.com/2016/01/26/us/obama-to-urge-easing-401-k-rules-for-small-businesses.html [1/26/16]

2 – tinyurl.com/je5uj3r [1/26/16]

3 – bloomberg.com/politics/articles/2016-01-26/obama-seeks-to-expand-401-k-use-by-letting-employers-pool-plans [1/26/16]

4 – irs.gov/Retirement-Plans/Retirement-Plans-Startup-Costs-Tax-Credit [8/18/15]

^{_{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}}      

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