Markets were mixed in February as investors dealt with a number of uncertainties.
After a strong start to the year, US stocks faced pressure amid increasing market noise. While the month started on a positive note, renewed concerns over inflation, interest rates, and economic growth weighed on investor sentiment as the month progressed. Growing tariff rhetoric also added to the volatility experienced later in the month as investors assessed the potential impact on markets.
Small-cap stocks were the laggard, with the CRSP US Small Cap Index declining 4.84%. Following the trend lower, the Nasdaq 100, Dow Jones Industrial Average, and S&P 500 also retreated 2.69%, 1.39%, and 1.30% respectively, in part due to weakness in the tech sector. However, the S&P 500 Value Index fared better gaining 0.43%, supported by the more defensive blue-chip companies. As a whole, sectors were largely mixed for the month with value outpacing growth.
Stocks overseas held up better than their US counterparts. Developed international stocks rose 2.26% and emerging markets added 0.74%. European markets have been supported by improving economic data and more accommodative monetary policies, while emerging markets benefit from Chinese tech stock momentum. A weakening US dollar also provided support for global markets.
With stocks seeing mixed results, bonds were a bright spot in February. Aggregate US bonds rose 2.20% as the 10-year Treasury yield fell from 4.58% to 4.24%. While there was no Fed meeting during the month, the probability for rate cuts later in the year grew as expectations shifted. Higher-yielding bonds were also positive as credit spreads remained relatively healthy.
While market volatility increased, February provided another great reminder on the importance of diversification. As large-cap tech companies faced some headwinds, other sectors and asset classes provided more support. It’s normal to see short-term fluctuations amid geopolitical events, but it’s important to look past the noise and keep focused on the bigger picture. Having a plan and investment strategy in place can provide clarity and guidance when markets seem uncertain.
There’s a new sheriff in town, and it has a smile…
For the first time ever, Amazon surpassed Walmart in quarterly revenue, making the largest revenue-generating company in the US.
Walmart had held the title for the past 12 years, but Amazon’s $187.8 billion edged out Walmart’s $180.5 billion for Q4 2024.
While Walmart still makes most of its income from retail sales, Amazon makes a large portion from non-retail operations. Its cloud computing services account for 17% of annual sales while digital ads have been growing as well.
Both companies have been learning from each other. Walmart has been expanding into the digital ad business, buying television company Vizio last year, and Amazon is trying to bulk up its grocery sales.
The trend highlights the increasing competition between traditional retail and digital platforms.
Another one bites the dust…
Nikola Corporation, once a prominent player in the electric vehicle industry, filed for bankruptcy in February.
Its journey has been tumultuous. In 2020, the company achieved a market valuation close to $30 billion, surpassing established automakers like Ford.
However, allegations of fraud against its founder in 2022 cast a long-lasting shadow over the company’s reputation.
Nikola had fundamental problems as well – it lost hundreds of thousands of dollars on every vehicle it sold.
The company joins fellow electric vehicle makers Fisker Automotive, Electric Last Mile Solutions, and Lordstown Motors. High costs and waning demand have caused these once promising companies to go bankrupt in recent years.
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | -1.27% | -0.97% | 1.40% | 18.54% |
| NASDAQ (QQQ) | -2.70% | -0.15% | -0.60% | 16.44% |
| Large Cap Growth (VUG) | -3.02% | -0.70% | -1.15% | 20.09% |
| Large Cap Value (VTV) | 0.81% | -1.49% | 5.22% | 17.79% |
| Small Cap Growth (VBK) | -6.30% | -9.23% | -2.36% | 8.63% |
| Small Cap Value (VBR) | -3.67% | -8.01% | -0.20% | 11.13% |
| Developed International (VEA) | 2.26% | 3.05% | 6.80% | 8.39% |
| Emerging Markets (VWO) | 0.74% | 0.53% | 1.57% | 12.54% |
| REITs (VNQ) | 3.70% | -3.41% | 5.41% | 14.11% |
| Aggregate Bonds (BND) | 2.16% | 1.04% | 2.77% | 5.80% |
| Corporate Bonds (VCIT) | 1.93% | 0.99% | 2.60% | 7.49% |
| High Yield Bonds (JNK) | 0.93% | 1.40% | 2.29% | 9.69% |
| Long Term Treasuries (VGLT) | 5.15% | -0.08% | 5.76% | 3.33% |
| International Bonds (BNDX) | 0.88% | 0.35% | 1.13% | 5.92% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- Water can boil and freeze at the same time. This is called the triple point – where the temperature and pressure are just right for a substance to exist in all three phases.
- Bringing together a country divided, March 6 is both National Oreo Day and National Dentist’s Day.
- If you could fold a piece of paper 42 times it would reach the Moon due to the exponential growth of its thickness.
- Sloths can hold their breath longer than dolphins by slowing their heart rate to control their breathing.
– The Aspire Wealth Team
Important Market Update
