US stocks closed the week higher, breaking several weeks of losses. The Dow rose 1.2%, leading gains, while the tech-heavy Nasdaq lagged due to weak large-cap tech performance. Value stocks outperformed growth for the fifth straight week. Trading volumes were light as investors assessed new policies, economic forecasts, and geopolitical risks. The Federal Reserve kept rates steady at 4.25%–4.50% and maintained its projection for two cuts this year. While inflation expectations for 2025 rose and GDP growth forecasts fell, markets welcomed the Fed’s generally dovish tone. Economic data was mixed: retail sales rose just 0.2% in February, missing estimates, but core sales—key for GDP—beat forecasts. Treasury yields fell after the Fed meeting, boosting bond prices. Municipal and high yield bonds also gained, with investor sentiment improving later in the week.
The STOXX Europe 600 Index rose 0.6%, ending a two-week slide, boosted by hopes of increased government spending. Gains were tempered by concerns over upcoming US tariffs. Germany’s DAX slipped, while Italy’s FTSE MIB rose nearly 1%. Central banks stayed cautious. The Bank of England held rates at 4.50%, with only one member voting for a cut. ECB President Christine Lagarde warned US tariffs could dent eurozone growth and lift inflation.
