Friday’s Rally Put Markets at Critical Juncture

Shah Gilani|March 3, 2025

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Markets love to do the unexpected…

With 15 minutes left on the trading day, most of Wall Street was already packing up to head home on Friday after a tough week.

Suddenly, the S&P 500 jumped 1%, closing the week only modestly lower than it opened.

And it left everyone wondering…

What the heck just happened?

Had we shaken off all our worries?

Tune in to today’s video to see what all the fuss was about… and what to do about it.

Click the thumbnail below to watch.

TRANSCRIPT

Hey, everybody. Shah Gilani here with your Monday takeaways.

It’s 9:00 A.M. as I’m recording this.

And so far, so good.

The futures are up a little bit, and that’s a positive.

Hopefully, we get a follow-through from what we saw on Friday, which was a pretty nice rally to end the day.

Nonetheless, a lot of things have changed.

It seems like only a couple of months ago, business and consumer sentiment were good.

You had the election. The markets were soaring.

You had the Trump trades working.

You had all kinds of positive expectations for what was going on and what could happen.

It was all good. The markets were moving higher.

Everybody was looking to the future in 2025, and so far so good.

Unemployment was trending down to 4%…maybe going lower.

GDP looked like we might have back-to-back years of GDP growth knocking on 3%.

It was all good until it…wasn’t.

So what’s changed?

Well, a lot of things have changed.

Number one, consumer sentiment has changed.

There are greater expectations for inflation in the future coming out of consumer surveys. That’s a problem.

The takeaway there is consumers, if they falter here, because they are our economic growth engine, that could be a problem.

Takeaway number two: On Friday, we got the Atlanta Federal Reserve’s GDP Now number.

GDP Now from the Atlanta Fed is their “real-time” calculation of all the metrics they enter into their algorithm to determine what GDP growth, or lack thereof.

The scary thing is that for the first quarter, Atlanta GDP Now growth isn’t showing growth for GDP in the first quarter.

They’re looking at a pullback in economic growth of -1.5%. This number changes a lot. But that’s down from +2.3% only a few weeks ago.

Bloomberg’s economic team just recently came out with their forecast for first-quarter growth in GDP terms for 2025 at +0.4%. That’s down from +1.5% a month ago.

So, everybody seems to be kind of ratcheting back on their expectations for GDP growth. And investors are doing the same. The S&P 500 was down the last two weeks.

Friday’s rally into the close was great. But, the S&P 500 was still down two weeks in a row. It’s down four out of the last five weeks. This is not pretty.

So, I’m gonna give you a quick look at what I see, and you’ll understand what I’m looking at.

I’m looking at the S&P 500.

We had a nice bounce here (Friday), but we came right down the previous day (Thursday) to some support.

Now, if we break down through here ($5,800), things are in a little bit of trouble. That’s not such a great-looking chart.

The Russell 2000, which made an all-time high at the end of last year, going into 2025, was picking up steam.

Investors were liking what they saw.

The sentiment for small caps, for small businesses, was positive.

That’s turned. Look at the Russell 2000 now.

The IWM is the ETF that tracks the Russell 2000 index.

This is a pretty ugly chart. Here’s the high back in November.

So what does this say? And it’s further broken down here. So there’s some support here ($210-$215 in the IWM).

The IWM cut through everything.

So the takeaway here is there’s nervousness out there. Small businesses are nervous.

Rates have come down. The 10-year Treasury is now trading around 4.23%. That’s down from 4.79% not too long ago. That’s a huge rally in bonds. But still, small businesses don’t seem to think that much of it. Investors are looking for broadening out in small caps.

Apparently, they’re not buying the rhetoric that maybe rates coming down will help the small-cap and mid-cap stocks. That certainly isn’t reflected in the indices.

So, the takeaway is there’s a lot of mixed stuff out there: mixed sentiment and mixed thoughts.

The S&P 500, November 5, the day after the election, was $5,782.

It’s $5,954 now. We can’t hold above $6,000. That’s a problem.

So, seeing the futures rise this morning about +0.5% on the S&P 500, just a little bit after 9:00 A.M. right now.

That’s a positive. Let’s see how we do the week. It’s going to be, I think, dicey.

Friday, we got some big labor numbers.

We will see what the unemployment rate is. We will also see payrolls and how many jobs were created.

The consensus there is not great – about 160,000 new jobs to be added.

We’ll see. So it’s going to be dicey.

I think what you really should be doing here in terms of takeaways is be cautious.

This is a very interesting dip, but it’s also scary, people.

When you look at some of the big caps, the mega-cap tech names, and you wanna buy the dip (and I’m always a dip buyer), I am cautious on this dip. Because, this time, things are a little dicey.

This is Microsoft, people.

There is support ($410), and it crashed right through.

The king of cool of lately, which had a monumental streak of up days, was Meta.

It had a wonderful run higher as the markets were dicey. Then all of a sudden, Meta just falls.

Now, can any of these stocks get back on their feet?

Sure, they can. But I don’t know what the reason will be. I don’t see an impetus. I don’t see a trigger for markets to all of a sudden start rallying.

Yeah. There could be a lot of things.

And guess what?

Today, we have Amazon. Boom.

Today, we’re supposed to get tariffs on Mexico and Canada to the tune of 25%, and an additional 10% on China.

Are we gonna have those?

Are we gonna see that? Or is there going to be some last-minute brinkmanship that gets Mexico and Canada to come to the table and tell the Trump administration we’ll do this, this, and this? Okay, we’ll hold off for now.

I don’t know.

So, markets are a little bit on edge, as they should be. They’re showing some positivity.

So far, those tariffs have been negotiating tools. And a lot of people still expect this round yet again to be another negotiating tool to get something from Mexico and from Canada.

So, there are your takeaways.

Be careful out there, people.

It’s slice and dice time.

It could also be a great time to buy this dip.

Me?

I’m holding off for the time being.

Cheers.