Wall Street Awaits Key Data as Political Uncertainty Clouds Outlook

Mar 31
3 min read

Updated: Apr 1

Market Recap: Inflation Meets Expectations, but Consumer Confidence Declines

February’s PCE inflation data aligned with market expectations on both a monthly and annual basis. However, the core inflation rate — which excludes food and energy — came in slightly higher than anticipated. Despite these numbers, their immediate impact on markets is limited, as the effects of tariffs are expected to become more pronounced starting in March.

The broader market sentiment remains negative. Lululemon and Oxford Industries have both downgraded their outlooks, citing growing consumer uncertainty driven by Donald Trump’s policies.

Bank of America’s CEO warned that auto tariffs could result in higher prices and weakened demand, making a rate cut this year increasingly unlikely. Adding to market anxiety, Elon Musk hinted in an interview with FOX that his involvement with DOGE is nearing an end. Musk also claimed that his efforts to reduce the US budget deficit by $1 trillion have almost been achieved. Tesla, however, has not escaped the fallout, with the electric vehicle giant set to report its sales figures next week.

Economic Overview: Inflation and Consumer Sentiment Under Scrutiny

February’s PCE inflation data revealed:

Headline inflation: Up 0.3% month-over-month and 2.5% year-over-year, in line with expectations.
Core inflation: Up 0.4% month-over-month and 2.8% year-over-year, slightly exceeding Wall Street’s estimates of 2.7% and 0.3%, respectively.

Later today, investors will closely monitor the final March Consumer Confidence Index from the University of Michigan, which is expected to register at 57.9 points. Wall Street will also pay attention to the inflation expectations component of the index, given rising uncertainty.

Additionally, Raphael Bostic from the Atlanta Fed is scheduled to speak at 8:30 PM CET. Earlier this week, Bostic suggested that a rate cut should not be expected until 2025.

Earnings Recap: Strong Results Tempered by Weak Outlooks

Dutch Bros.:

Management indicated that the current quarter’s outlook is slightly better than expected.
Long-term plans remain on track, with a target of over 9,000 stores in operation by 2029.

Lululemon:

Earnings and revenue exceeded expectations for the previous quarter.
However, the outlook for the current quarter remains weak, with management highlighting consumer caution driven by political uncertainty.

Oxford Industries:

Earnings and revenue outperformed market expectations.
Despite the positive results, the company warned that both revenue and earnings for the current quarter are expected to fall significantly below targets, citing ongoing political uncertainty.

Upcoming Market Catalysts: Data and Political Events to Watch

The coming week presents several key developments that could shape market sentiment:

Sunday Night: China will release its March PMI, reflecting further improvements in regional economic sentiment.
Tuesday: The March ISM Manufacturing PMI will provide insights into US industrial activity.
Thursday: The March ISM Services PMI will follow, shedding light on the strength of the services sector.
Friday: The March US Jobs Report will be released, offering a snapshot of the US labour market’s health.

Wednesday, however, is set to be the most critical day, as Donald Trump is expected to announce the details of the reciprocal tariffs. Adding another layer of uncertainty, the final steps in the TikTok USA decision are also expected to be revealed next week.

On the earnings front, the upcoming week is relatively quiet:

Monday: Results from PVH Corp.
Wednesday: Earnings from RH.
Thursday: Conagra Brands is set to report.

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