Resilience (and Success) Begins with a Foundation

Last week, financial markets faced downward pressure, as investor sentiment weakened in response to economic policy outlooks. Amid this turbulence, the S&P 500 revealed a mixed performance across sectors. Energy and Technology emerged as the strongest performers, while Consumer Discretionary and Financials bore the brunt of losses. Despite the week’s economic data presenting certain discouraging signals, bright spots within the market have continued to demonstrate resilience and impressive results over the past year.

Weekly Performance

Data Source: Factset®        Performance Period:      2/17/2025  to 2/21/2025

With markets observing a shortened trading week due to the Presidents’ Day holiday on Monday, economic data releases remained significant, particularly within the real estate sector. The February homebuilder confidence index began the week on a somber note, declining to 42 from its previous reading of 47. This drop was primarily driven by ongoing concerns surrounding home affordability and the far-reaching impact of international trade policies, which influence nearly a third of the materials and appliances used in home construction. Additionally, January’s housing starts fell short of expectations, while building permits merely held steady at December’s levels. Existing home sales for January painted a similarly subdued picture, with figures totaling 4.08 million falling below both the forecasted numbers and the prior month’s 4.29 million. Beyond the housing sector, other economic indicators reflected a cautious outlook. Weekly initial jobless claims edged slightly higher, signaling continued uncertainty in the labor market. Meanwhile, U.S. leading economic indicators declined by 0.3% in January, marking a six-month downturn of 0.9%. However, this figure showed an improvement compared to the prior six-month decrease, suggesting potential stabilization ahead.

Looking forward, the upcoming week promises key economic data releases that will provide deeper insights into the state of the economy. Consumer confidence, personal income, and personal spending reports will shed light on household financial sentiment and economic activity. Meanwhile, fresh data on new and pending home sales from January will offer further context regarding the real estate market. The highly anticipated personal consumption expenditure (PCE) report will also be closely watched as a crucial indicator of inflationary trends.

Turning to corporate developments, one company that continues to command attention is KLA Corporation. As a global leader in technology, KLA specializes in software and hardware that bolster the capabilities of artificial intelligence (AI). The company’s 2024 results have been nothing short of impressive, with revenue surging by 12% to an all-time high. This growth has been fueled by an increasing demand for AI-driven solutions, a trend that is expected to persist, as industries continue to integrate AI into their operations. Additionally, KLA has focused on a foundation of  outstanding operating margins and robust free cash flow growth, which reinforce its financial strength. As a result, the company’s stock price has risen by more than 15% year-to-date, reflecting investor confidence in its continued innovation and industry leadership.

When one thinks of firm foundations, whether in real estate or technology, one should also reflect on Jesus’ words in the Gospel of Matthew: “Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.” (Matthew 7:24-27). From portfolio construction or achieving personal goals, a strong foundation remains the key to enduring success in an ever-changing world.

Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights

 Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights. Securities offered through Osaic Wealth, Inc. member FINRA/SIPC. Investment advisory services offered through Faithward Advisors LLC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Dream More, Plan More, Do More is a registered trademark of Faithward Advisors, LLC, Reg. U.S. Pat. & Tm. Off. Any opinions expressed in this forum are not the opinion or view of Faithward Advisors or American Portfolios Financial Services, Inc. (APFS). They have not been reviewed by either firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.