Investment update
Weekly insight into the marketplace.
March 17 to 21, 2025
Stock markets swung between gains and losses
After weeks of trade war-related turbulence, investors were in a buying mood on Monday. The bellwether S&P 500 turned into a second-straight winning session, ending the day 0.60% higher. The broad-based Dow rose 0.09%, while the tech-heavy Nasdaq gained 0.3%. In Canada, the TSX also carried momentum over from the previous session, climbing 0.94%, led by energy and mining stocks. The rallies lost steam on Tuesday, as cautious sentiment returned. The TSX lost 0.32% after hotter-than-expected inflation data and ongoing trade uncertainty raised fears of stagflation (inflation along with lower economic growth and higher unemployment). The U.S. stock market benchmarks also lost ground, led by losses from the tech sector. The Nasdaq fell 1.71%, the S&P 500 1.07% and the Dow 0.62%. The tone shifted dramatically on Wednesday, with the TSX advancing 1.47% for its best daily performance in seven months. It was good news on Wall Street, too, after the U.S. Federal Reserve (the Fed) said that two interest-rate cuts are still in the forecast this year. The Nasdaq gained 1.41%, followed by the S&P 500 and Dow which gained 1.08% and 0.92%, respectively. Thursday saw each of the major North American stock indexes dip, as investors took a breather after the previous day’s rallies. Stock markets ended the week on a positive note, with the U.S. benchmarks rallying into Friday’s closing bells to snap a four-week losing skid. The TSX was down on the day but outperformed its U.S. peers on a weekly basis.
Canadian inflation reaccelerated in February
On Tuesday, Statistics Canada reported the consumer price index (CPI) rose to 2.6% annually (and 1.1% monthly) in February, marking the first time in seven months that the inflation rate exceeded 2%. This increase was largely attributed to the expiration of a temporary federal sales tax break, which had been in effect from December 14, 2024 to February 15, 2025. This development underscores the sensitivity of consumer prices to tax policies and the impact fiscal policy can have on the nation’s economy. The Bank of Canada’s preferred CPI measures – median and trim – both increased to 2.9%. Market prices currently reflect investor expectations that the central bank will hold interest rates steady at the next policy meeting in April.
The Fed held rates steady
On Wednesday, the Fed announced it would maintain its benchmark interest rate within the target range of 4.25% to 4.5%, as the economic outlook called for higher inflation and lower economic growth. Speaking to media following the decision, Fed Chair Jerome Powell said a key contributor to the higher inflation expectation relates to U.S. trade policy: “A good part of it is coming from tariffs. But we’ll be working with other forecasters to separate non-tariff inflation [from] tariff inflation.” He also noted that while economists outside of the Fed have generally raised estimates on the chances of a recession, the likelihood of a severe downturn isn’t high. Overall, policy-makers haven’t changed the forecast of two cuts to come later this year: “At the December meeting, the median was two cuts. So, you come in and you see, broadly speaking, weaker growth but higher inflation. And they kind of balance [each other] out.” Stock markets surged to intraday highs as Powell spoke.
The stock and bond market*
| Index | Close | Week | YTD |
|---|---|---|---|
| S&P/TSX Composite | 24,968.49 | 1.69% | 0.97% |
| Dow Jones Industrial Average | 41,985.35 | 1.20% | -1.31% |
| S&P 500 Index | 5,667.56 | 0.51% | -3.64% |
| NASDAQ Composite | 17,784.05 | 0.17% | -7.91% |
| 10-year Canadian Bond Yield | 2.99% | -0.07% | -0.24% |
| 10-year U.S. Treasury Yield | 4.25% | -0.06% | -0.33% |
| WTI Crude Oil (US$/barrel) | $68.28 | 1.64% | -4.80% |
| Canadian Dollar | US$0.6969 | 0.11% | 0.24% |
| Bank of Canada Prime Rate 4.95% | |||
*Weekly performance ending March 21, 2025. Source: Bloomberg.
Canadian gross domestic product data for January (March 28): On Friday, Statistics Canada will release growth data for January, along with an early estimate for February, offering investors further insight into the state of Canada’s economy.
Circle these dates
April 2: U.S. tariff exemption on goods covered by the Canada-U.S.-Mexico Agreement expires April 16: Bank of Canada interest rate announcement April 18: North American markets closed for Good FridayApril 30: 2024 income tax filing deadline
The commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Life Insurance Company (“Co-operators”) believes these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness. Co-operators is committed to protecting the privacy, confidentiality, accuracy and security of the personal information it collects, uses, retains and discloses in the course of conducting business. Please visit cooperators.ca/privacy for more information. Co-operators® is a registered trademark of Co-operators Group Limited and is used with permission. Investing in your future. Together.TM is a trademark of Co-operators Group Limited. If you are a client who has received this, and you have questions or want to discuss your investments, please contact your Financial Advisor.
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