One of the most surprising aspects of stock market investing is that missing just a few of the best-performing days can drastically reduce long-term returns. For example, from 1990 to 2020, if you stayed fully invested in the S&P 500, you would have earned an average annual return of around 7.5%. However, if you missed just the 10 best days during that entire period, your return would have been cut in half!
What makes it even more interesting? The best days often occur during periods of high volatility, right after big downturnsβexactly when many investors are tempted to sell. This highlights the importance of staying invested for the long run rather than trying to time the market.
Market Wrap
U.S. stock markets experienced modest gains on Tuesday, February 18, 2025, with the S&P 500 reaching a new all-time closing high.
The S&P 500 edged up 0.2% to close at 6,129.58, surpassing its previous record. The Dow Jones Industrial Average added 10.26 points, or less than 0.1%, finishing at 44,556.34, while the Nasdaq Composite gained 14.49 points, or 0.1%, to close at 20,041.26.
Federal Reserve Outlook:
Investors are closely monitoring the Federal Reserve's policy stance, with upcoming minutes from the latest meeting expected to provide insights into future interest rate decisions. The bond market reflected this anticipation, as the 10-year Treasury yield rose to 4.52%.
Trade Policies and Tariffs:
A significant new announcement came from President Donald Trump, who declared his intention to impose a 25% tariff on imported automobiles, semiconductors, and pharmaceuticals. He indicated that more details about the auto tariffs would be revealed by April 2, while the timing for the semiconductor and pharmaceutical tariffs remains unspecified. This marks an escalation in trade measures, as previous tariffs primarily targeted imports from specific countries, whereas these new tariffs are sector-specific and have broader implications.
In response, European Union trade chief MaroΕ‘ Ε efΔoviΔ is scheduled to meet with U.S. officials today to discuss the potential impact and explore ways to prevent a trade conflict.
Consumer Behavior:
In anticipation of these tariffs, U.S. consumers have begun stockpiling goods, leading to a surge in purchases. This preemptive buying behavior reflects concerns over potential price increases and product shortages.
Housing Market Concerns:
The National Association of Home Builders reported a decline in homebuilder sentiment to a five-month low in February. Builders expressed concerns that tariffs on imports and higher mortgage rates could further increase housing costs, potentially dampening demand in the real estate market.
Meta Platforms Inc. slid 2.8%, ending a remarkable 20-session winning streak. This pullback may be attributed to profit-taking by investors after the extended rally.
Tesla Inc. experienced a slight decline due to potential delays in the rollout of its self-driving technology in China. These delays have raised concerns about Tesla's expansion plans in the Chinese market.
UnitedHealth Group Incorporated fell 4.4% amid reports of anticipated regulatory hurdles for its planned acquisition of Amedisys. These potential challenges have led to investor apprehension regarding the deal's completion.
Medtronic plc declined by 7% due to mixed fiscal third-quarter results, which fell short of analyst expectations. The company's performance has raised concerns among investors about its near-term growth prospects.
Nike Inc. rose over 6% after announcing a partnership with Kim Kardashian's Skims brand to launch a new women's fitness line. This collaboration is expected to expand Nike's reach in the women's apparel market.
Intel Corporation surged over 16% following reports that Broadcom and TSMC are considering bids for parts of the company. This potential restructuring sparked investor optimism about Intel's future prospects.
Occidental Petroleum Corporation rose 1.6% ahead of its earnings report, as investors anticipate positive results despite a year-long decline in stock value. The upcoming earnings are expected to provide insights into the company's performance amid fluctuating oil prices.
Constellation Brands shares increased by 4% following the disclosure that Warren Buffett's Berkshire Hathaway has taken a new stake in the company. This investment is seen as a vote of confidence in Constellation Brands' growth potential.
Super Micro Computer jumped more than 16% after issuing a strong fiscal projection, highlighting anticipated growth driven by artificial intelligence (AI) applications. This positive outlook boosted investor confidence in Super Micro's market position.
Genuine Parts Company declined after missing revenue and profit estimates, attributing the shortfall to weak market demand. This underperformance has led to investor concerns about the company's future growth prospects.
Conagra Brands fell 5.5% after lowering its sales guidance, citing ongoing supply chain issues and unfavorable currency exchange rates. These challenges have raised concerns about the company's ability to meet its financial targets.
Walgreens Boots Alliance climbed 14% amid renewed discussions of a potential sale to private equity firm Sycamore Partners. The possibility of such a deal has increased investor interest in the company's future direction.
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