Consumer Sentiment Drops In March, SP500 Remains Under Pressure

Key Insights

• Consumer Sentiment declined to 63.4 in March. 
• University of Michigan noted that the decline occurred before the Silicon Valley Bank’s failure.
• SP500 attempts to settle below 3950 after Consumer Sentiment report.

Consumer Sentiment Misses Analyst Expectations

On March 17, traders focused on the preliminary Michigan Consumer Sentiment report for March. The report indicated that Consumer Sentiment declined from 67 in February to 63.4 in March, compared to analyst consensus of 67.

Consumer Sentiment declined for the first time in four months. At current levels, Consumer Sentiment remains well above the low of 50, which was reached back in June 2022.

The University of Michigan commented: “This month’s decrease was already fully realized prior to the failure of Silicon Valley Bank, at which time about 85% of our interviews for this preliminary release had been completed.” Regional bank’s problems could have put additional pressure on Consumer Sentiment, so the final reading may be lower than preliminary data.

The FedWatch Tool indicates that there is a 70.1% probability of a 25 bps rate hike at the upcoming Fed meeting. The market’s expectations have stabilized in recent days, and Consumer Sentiment data should not have a material impact on Fed’s policy outlook.

SP500 Remains Under Pressure After Consumer Sentiment Report

SP500 continues its attempts to settle below the 3950 level after the release of Consumer Sentiment data. Trading action remains choppy as regional banks’ stocks are under strong pressure.

U.S. Dollar Index declined towards the 104.10 level as traders reacted to the weaker-than-expected Consumer Sentiment data.

Gold continued to trade near multi-week highs at $1950 as traders remained focused on the potential banking crisis.

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