The stock market, which had been resilient against potential sources of hurt, finally recoiled under the cumulative pressure of a slow-motion economic-growth scare and policy flux. Prior to the recent shaky action, the market had been in “immaculate rotation” mode, with sectors passing the baton mostly in stride. However, Warren Pies, co-founder of 3Fourteen Research, noted that the S&P 500 logged a new record with only 5.5% of its members hitting a 52-week high, less than half the average on past days of a fresh S&P 500 high. This behavior has meant a less-emphatic signal of good future returns, making the market more accident-prone. Scott Chronert, U.S. equity strategist at Citi, captured the sentiment entering Friday: “Higher rates, lesser Fed cuts, DeepSeek, tariffs, and softer guidance despite impressive Q4 results all could have weighed more substantially on headline indices.” The setback was a function of a pileup of factors, including a sour University of Michigan consumer sentiment reading, Walmart’s cautious first-quarter guidance, and a soft services-sector gauge. The S&P 500 has slouched back to levels first reached in early December, and the cyclical-acceleration “Trump trade” sectors have retreated. Seasonal weakness is less a reason to flee from risk than an input to setting realistic expectations for the path ahead. Despite recent Friday sell-offs, the S&P 500 is up 2.4% for the year and is a mere 2% off its peak. — news from CNBC
