Wall Street Breakfast
Households face $3 trillion in lost stock wealth this quarter
Mon, 24 Mar 2025
BofA estimates a third of last year’s equity wealth buildup could be gone. (0:15) PMI figures indicate GDP below 2% in Q1. (0:44) Boeing snags an upgrade. (2:57) Show NotesFord F-150 faces regulatory investigationEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: Why is U.S. household equity wealth expected to drop by $3 trillion?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Monday, March 24th, and I'm your host, Kim Kahn. Our top story so far. We're mixing things up and starting with the Wall Street Research Corner today. U.S.
investors are set to see a decline in stock-based wealth of a whopping $3 trillion for Q1 2025, according to estimates from B of A using private client equity data. That's about a third of the $9 trillion that household equity wealth rose in 2024 when it climbed to about $56 trillion, strategist Michael Hartnett said. U.S.
Chapter 2: What are the latest PMI figures indicating for U.S. GDP?
fiscal, monetary, and trade policy are currently hawkish, while the yield curve is set to invert, Hartnett noted. Growth numbers will also likely come with some sticker shock, as the latest PMI figures showed that GDP will likely come in at an annual rate below 2% for Q1. At face value, the March S&P Global US Composite PMI topped estimates thanks to a rebound in services activity.
The Flash Composite rose to 53.5 from 51.6 in February. The services PMI came in at 54.3 versus 51.2 consensus and 51 in the previous month, but the manufacturing PMI clocked in at 49.8 versus 59.1 expected and 52.7 prior.
Chris Williamson, chief bureau economist at S&P Global Market Intelligence, said, "...a welcome upturn in service sector activity in March has helped propel stronger economic growth at the end of the first quarter."
Chapter 3: How are tariffs impacting U.S. inflation rates?
However, the survey data are indicative of the economy growing at an annualized 1.9% rate in March and just 1.5% over the quarter as a whole, pointing to a slowing of GDP growth compared to the end of 2024. A key concern over tariffs is the impact on inflation, with the March survey indicating a further sharp rise in costs as suppliers pass tariff-related price hikes on to U.S.
companies, he added. Firms' costs are now rising at the steepest rate for nearly two years, with factories increasingly passing these higher costs on to customers. Thankfully, from the Federal Reserve's perspective, services inflation remains relatively subdued, but this reflects the need to keep prices low amid weak demand, which will harm profits.
Chapter 4: What recent market trends are influencing stock and treasury prices?
Hopes that tariffs will be more targeted than scattergun have brought out stock buyers today. All the major averages are higher, and the S&P 500 had one of its best gap-up opens in years. Continuing the risk-on move, treasury prices are lower and yields are back up, with the 10-year back above 4.3%.
Seeking Alpha Analyst Market Gauge notes that the market has been dragged down by the magnificent 7, but the market in other areas is not as damaged. For example, the equal weight SPY, or SP, is essentially flat on the year, and the cyclical sectors are up 3%. Additionally, the risk-off sectors are up more than 4% on the year.
RSP, consumer staples, and industrials are outperforming, and if the market starts to muster up some bullish confidence that this is more than just a bounce in oversold areas, it will likely show up in these ETFs, they said. Among active stocks, Boeing caught an upgrade from Malleus Research, which shifted its rating on the stock to buy from hold.
Malleus analyst Scott Mikus pointed to several reasons for Boeing's improved outlook, the leadership of a chief executive officer with a strong operational focus, faster-than-anticipated deliveries of 737 aircraft post-strike, and the recent contract win for the Sixth Generation Fighter Initiative, known as the Next Generation Air Dominance Program.
Morgan Stanley initiated coverage on Dutch Brothers with an overweight rating. Analyst Brian Harbour and his team noted that Dutch Brothers is a well-liked brand and a favorite category and is rapidly growing on the national stage. The coffee store chain was said to be hitting its stride on development and comparable sales growth.
And Bank of America reiterated its buy rating on Dell after Nvidia mentioned its relationship with the PC and server giant in positive fashion at last week's GTC event. Analyst Wamsi Mohan said, Our recent checks with suppliers in Asia suggest a strong 2Q ramp-up for GB200 systems and share gains at Dell.
In other news of note, the National Highway Traffic Safety Administration says that it's initiated an investigation into about 1.3 million Ford Motor F-150 pickup trucks. The investigation is tied to reports of an unexpected gear downshift, which was then accompanied by a temporary rear-wheel lockup.
The NHTSA's announcement marks the beginning of an official inquiry into this issue, which could potentially affect a significant number of the best-selling pickups. Overall, F-150 sales have faced challenges, including a 5% decline in 2024, reflecting broader market shifts by drivers towards SUVs and hybrid vehicles. That's all for today's Wall Street Lunch.
Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com. And for a wealth of coverage on stocks and ETFs, go to SeekingAlpha.com.
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