Review — Barron's

By Teresa Rivas

It's not yet March — to the chagrin of parts of the country still in a deep freeze — but the phrase "In like a lamb, out like a lion" befits this past week's stock movements.

The S&P 500 index began the holiday-shortened week with two record closes — its second and third of 2025 — but then retreated on both Thursday and Friday. Ultimately, it was down 1.7% for the week to 6013, while the Dow Jones Industrial Average and the Nasdaq Composite both fell 2.5%.

Things started well enough, with the index grinding higher on Tuesday as the market continued to shrug off tariff worries. Tech names followed their Chinese counterparts higher, after China's President Xi Jinping met with business leaders over the weekend in a show of support for the tech space. Geopolitical worries put a dent in those gains, but not enough to keep the S&P 500 from reaching a new closing high.

It edged higher again on Wednesday, as investors were largely pleased with the minutes from the latest two-day meeting of the Federal Reserve's rate-setting committee. Although the central bank said it wants to see "further progress on inflation" before deciding to cut interest rates again, the lack of any curveballs was enough to help stocks reach another record.

Walmart spoiled the party, helping to sour sentiment on Thursday. The retail bellwether had a strong holiday quarter, as anticipated, but missed lofty expectations for its full-year forecast. The retailer expects sales to grow 3% to 4%, while analysts were looking for the higher end of that range.

Given its size, Walmart has one of the best reads on the health of the consumer. Management reiterated that U.S. shoppers were resilient, but the Street was clearly hoping for more reassurance. It may be prudent for the company to underpromise and over-deliver, but it doesn't send an upbeat message about the consumer at a time when ongoing inflation and tariff threats have led to concerns about spending, which, after all, powers the bulk of the U.S. economy.

"Inflation and economic uncertainties are expected to impact consumer spending, leading Walmart to adopt a conservative sales outlook for the coming year," writes Jay Woods, chief global strategist at Freedom Capital Markets. "They are the bellwether when it comes to discount retail, and any shift from them could speak volumes to the impact of inflation."

Alas, things didn't improve much with Friday's data. The final reading of the University of Michigan's consumer sentiment index for February came in at 64.7, below the 67.5 economists were modeling. That represents a 10% decrease from January, with all five index components falling this month, which only added to the gloom. Existing home sales in January also came in lower than expectations.

Still, it's worth noting that even with a lackluster end to the week, the S&P 500 is still up well over 2% this year. "While 2025 upside is a far cry from back-to-back 20%+ years, it is still nothing to scoff at," writes Citigroup U.S. Equity Strategist Scott Chronert. "Breaking strong sentiment will take more."

Take that, Walmart.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

The Standard & Poor's 500 fell 1.7% this week as consumer discretionary and communication services stocks weighed.

The index ended Friday's session at 6,013.13, moving it into the red for the month. The S&P 500 is now down 0.5% in February, but up 2.2% this year.

Data released this week by the National Association of Realtors showed January existing home sales in the US dropped more than projected amid elevated mortgage rates and higher prices. US housing starts fell more than expected last month amid declines in single- and multi-family projects, government data showed

Walmart (WMT) issued a full-year earnings outlook below market estimates amid uncertain consumer behavior and geopolitical conditions. The disappointing guidance came despite better-than-expected fiscal fourth-quarter results from the retailer.

The consumer discretionary sector had the largest percentage drop this week, down 4.3%, followed by a 3.7% decline in communication services. Industrials, materials, financials and technology also fell.

Cruise operators' stocks were among those hit hardest in the consumer discretionary sector as newly confirmed US Commerce Secretary Howard Lutnick suggested the Trump administration would force cruise operators to pay US taxes. Shares of Royal Caribbean Cruises and Carnival fell 11% each on the week while Norwegian Cruise Line Holdings lost 8.6%.

In communication services, shares of Facebook parent Meta Platforms fell 7.2%. The company said in a regulatory filing late Thursday that it has increased the target bonus for each of the company's executive officers, other than its chief executive, to 200% of base salary from 75%, effective beginning with the 2025 annual performance period.

However, the utilities sector rose 1.4%, followed by gains of 1.1% each in energy and health care. Consumer staples and real estate also edged higher.

American Electric Power was among the gainers in utilities, up 3.4%. Morgan Stanley raised its price target on the stock to $108 from $105 while keeping its investment rating at overweight.

Devon Energy was among the energy sector's gainers, climbing 8.2% as the company reported Q4 core earnings per share above estimates while revenue also surpassed the Street view.

Next week's earnings calendar features Home Depot (HD), Intuit (INTU), NVIDIA (NVDA), Salesforce (CRM), Lowe's (LOW), TJX (TJX) and Berkshire Hathaway .

Economic data will include February consumer confidence, revised Q4 gross domestic product and January personal consumption expenditures, a closely watched inflation report.