March 2025 was a month marked by significant volatility across global markets. The Trump administration's tariff announcements and ongoing political tensions fueled uncertainty, leading to mixed performance across asset classes.
Stock Market
The S&P 500 index experienced a significant decline of 5.6% in March, marking its worst performance since December 2022. The "Magnificent 7" group of large-cap technology stocks continued their downward trajectory, returning -9.8% for the month. Conversely, the remaining 493 stocks declined by -3.7%. Collectively, U.S. Growth stocks decreased by -8.4% in March and -10.0% year-to-date, while Value stocks were down -2.9% for March but remained positive with a 1.6% return year-to-date. Mid-cap and small-cap stocks exhibited similar trends to their larger counterparts, declining by -5.5% and -6.1% respectively.
International markets fared better, with Foreign Developed stocks closing down only -0.3% for the month while Emerging markets ending March higher by 0.7%. The weaker U.S. dollar, which fell 3.1% during March, provided a tailwind for international and emerging market equities. In contrast, the euro achieved its largest weekly gain against the dollar since 2009, following the announcement of increased spending plans by European officials.
Bonds and Interest Rates
In the fixed income markets, the Federal Reserve has kept interest rates unchanged at 4.25%-4.50% for the second consecutive month. The Fed has maintained its outlook for two rate reductions by the end of the year. The decision to pause rate changes was influenced by concerns regarding the economic repercussions of new tariffs and political uncertainty. Treasury yields remained stable, with the 10-year yield holding at 4.23%. The U.S. Aggregate Bond Index showed minimal change, increasing by only 0.04%.
Economic Data
Economic indicators for March painted a mixed picture. The Federal Reserve adjusted its GDP growth forecast for 2025 down to 1.7% from the previous 2.1%. Inflation moved further above the Fed’s 2% target, with the Personal Consumption Expenditures (PCE) index rising to 2.8%. Consumer sentiment fell sharply, reaching its lowest level since November 2022.
Navigating Uncertainty
March 2025 was characterized by heightened uncertainty and market turbulence. While U.S. equities struggled, international markets showed resilience. As we move forward, it remains crucial to maintain a long-term perspective and not react impulsively to short-term fluctuations and headlines. Investors should stay tuned for further developments, particularly regarding tariff policies and upcoming economic data releases.
Market Update: April 4, 2025
Yesterday, global markets reacted to President Trump's announcement of reciprocal tariffs on imports from over 90 countries, including China and the European Union. These tariffs, which range from 10% to 54%, are intended to balance trade deficits by imposing duties equivalent to those faced by U.S. exports. The announcement has led to significant market volatility, with U.S. stock futures falling sharply and international markets bracing for potential retaliatory measures. Today, the markets are experiencing additional volatility across the globe following China’s announcement of retaliatory tariffs. Investors are closely monitoring the situation as the U.S. tariffs are set to take effect on April 9th and China’s retaliatory tariffs are scheduled for April 10th.
