March Charts of Interest: A Buying Opportunity?

The S&P 500 index took less than one month to fall into its current correction. Historically, corrections have taken three to four months, on average, to bottom. Yesterday, CFRA Research chief investment strategist Sam Stovall tweeted that fast drops have historically been followed by fast rebounds. Tariffs are the big question mark, though.

This month’s charts of interest provide some insights you are likely not seeing in the headlines about the current market environment.

Buying on the Dips Frequently Pays Off

Buying stocks after the S&P 500 has fallen at least 10% has historically been a profitable move. “An investor buying the S&P 500 after it declined by 10% from its high would have enjoyed a positive return during the subsequent six months in 76% of 21 episodes, with the hit rate rising to 86% excluding the seven episodes that occurred within 12 months of a recession,” wrote Goldman Sachs strategists in a recent report.

The S&P 500 fell into a correction, defined by a drop of at least 10%, last week.

Not-too-Hot Inflation Is Good for Stocks

Inflation continues to be on many people’s minds, but the sticky moderate levels of it have not been kryptonite to stocks. According to Fidelity’s Denise Chisholm in a LinkedIn post, the best market returns have historically occurred when the core consumer price index (CPI) is between 3% and 4%—”exactly where we are today.”

Fewer Calls for an Economic Soft Landing

The number of corporate executives who talk about the possibility of an economic soft landing—low inflation occurring without a recession—has significantly dropped. “On the bright side, AlphaSense notes there’s been no uptick in mentions of ‘recession’ yet,” observed Axios.

Expectations for Several Interest Rates Cuts Are Softening

Yesterday’s updated projections by the Federal Open Market Committee (FOMC) reinforced the outlook for just one to two quarter-point (0.25%) interest rate cuts this year. Federal fund future traders think there could be more.

As of this morning, expectations for interest rates to be cut by up to one full percentage point in 2025 have rebounded. The CME FedWatch Tool shows a 20.4% chance of this occurring by the December 2025 meeting, up notably from yesterday. Just one month ago, traders were pricing in a 3.5% chance of this happening.

 Source: CME Group.

Trading in 401(k) Plans Increased Last Month

“Trading activity was above-normal on nearly half of the days [in February],” observed 401(K) recordkeeper Alight Solutions. The trading involved “money almost exclusively moving from equity funds to fixed income instruments.” Target-date funds saw the largest outflows even though they are designed to provide age-appropriate allocations.

I’ll add that Alight Solutions’ data shows total transfers as a percentage of starting balance as being just 0.27%. It is possible that those who traded the least were also the ones with the largest balances in their 401(k) accounts.

 Source: Alight Solutions.

You Can Go Back to Enjoying Your Omelets

I posted a chart last month showing how much egg prices have risen. The surge has now been cracked as this chart from Trading Economics shows. “No significant outbreaks of highly pathogenic avian influenza (HPAI) have been reported in March to date and the supply situation is rapidly improving,” reported the U.S. Department of Agriculture in its weekly Egg Markets Overview.