Stock Markets Experience Whiplash as Traders Scramble to Make Sense of Economic Headlines

A roller-coaster week for markets came to a close with stocks experiencing wild fluctuations as traders grappled with the multitude of headlines surrounding the economy, tariffs, and global events. The S&P 500 was no exception, plummeting over 1% before staging an "oversold bounce" following Federal Reserve Chair Jerome Powell's reassuring comments about the state of the economy.

This seesaw pattern is reflective of the broader market sentiment, which has been marked by heightened volatility in recent times. Investors are left to navigate a complex web of news and data points, making it challenging to discern any clear direction for markets.

Tariffs Remain a Source of Concern

The uncertainty surrounding tariffs has been a major contributor to the market's whiplash. The S&P 500 dropped below its closely watched technical level – its 200-day moving average – before recovering somewhat in the final trading session of the week. While some observers attribute this volatility to "oversold conditions," others caution that the underlying issues driving these fluctuations remain unresolved.

Economic Data Provides Mixed Signals

The latest economic data provided a mixed snapshot of the labor market, with US job growth steadying in February while the unemployment rate rose to 4.1%. Nonfarm payrolls increased by 151,000, although this figure was revised downward from the prior month's estimate. While some analysts argue that these numbers are not particularly concerning, others warn that the lack of clarity on the economy's trajectory will continue to fuel market uncertainty.

Market Reactions

In response to the economic data and market fluctuations, investors have been advised to maintain a diversified portfolio as they navigate this volatile landscape. Experts caution against placing too much weight on any single indicator or metric, emphasizing the need for a more nuanced understanding of the underlying drivers of market behavior.

Some key moves in markets during this tumultuous week include:

• The S&P 500 rose 0.6% by 4 p.m. New York time
• The Nasdaq 100 increased by 0.7%
• The Dow Jones Industrial Average gained 0.5%
• The MSCI World Index rose 0.2%
• The Bloomberg Magnificent 7 Total Return Index also rose 0.2%
• The Russell 2000 Index increased by 0.4%

Currency and Bond Markets React

The currency markets have also been impacted by the economic uncertainty, with the Bloomberg Dollar Spot Index falling 0.2% over the course of the week. Meanwhile, the euro strengthened to $1.0851 against the dollar, while the British pound rose to $1.2929.

In bond markets, yields on 10-year Treasuries increased by two basis points to 4.30%. Germany's 10-year yield was little changed at 2.84%, while Britain's 10-year yield declined by two basis points to 4.64%.

Cryptocurrency and Commodity Markets

Bitcoin plummeted 4% to $86,226.2, while ether fell 3.8% to $2,129.51. In commodities, West Texas Intermediate crude rose 1% to $67.02 a barrel, while spot gold remained largely unchanged.

This story was produced with the assistance of Bloomberg's automation system.