03/06/2025
📉 Market Update: February Recap & March Outlook 📈
With plenty happening in the news and markets, we’re here to break down key trends from February and what could shape the month ahead. Plus, don’t forget to check out our full quarterly commentary, linked below!
📉 Equity Markets Take a Step Back
After two strong years of 20%+ returns, markets have started 2025 with a pullback. The S&P 500 is down from all-time highs by about 6%, and the NASDAQ is roughly 10% off its peak—right around correction territory. While red on the screen isn’t fun, keeping perspective is key.
🌍 Geopolitics & Market Uncertainty
The U.S.’s position as the dominant global power brings economic advantages, but global confidence in the U.S. is being tested—particularly in trade negotiations and international conflicts like the ongoing war in Ukraine.
⚖️ Tariffs: A Double-Edged Sword?
Dr. David Kelly of JPMorgan compares tariffs to labor strikes—useful as a negotiating tool, but harmful if prolonged. Short-term tariff threats may help secure better trade terms, but extended tariffs could weaken the economy they aim to protect.
📊 Inflation, Trade Policy & Market Volatility
Upcoming CPI and PPI reports will be closely watched for inflation signals and trade impacts. With potential tariff changes on the horizon, we’ll see how they affect supply chains and consumer prices.
⏳ March 14th: Government Funding Deadline Approaches
Without a new spending bill or temporary extension, the U.S. government could shut down, furloughing employees and halting non-essential services. Political disputes over spending priorities and executive authority continue to drive uncertainty.
🏡 Housing Market Struggles
Both new and existing home sales remain weak. While housing typically contributes 15-18% to U.S. GDP, the broader economy has remained resilient.
🌍 The Case for International Equities
International markets outperformed in February, offering benefits like lower valuations, currency diversification, and strong capital returns through dividends and buybacks. The European Central Bank just cut rates by 25 basis points, and Germany announced a €500 billion stimulus plan—fueling European market gains.
🏢 Real Estate: A Bright Spot
Public REITs had a strong start to the year, benefiting from lower interest rates and limited exposure to trade policy shifts or global tensions.
📅 March 19th: Federal Reserve Decision
The Fed held rates steady in January and remains in “wait and see” mode. Futures markets suggest a 91% chance of another pause and a 9% chance of a rate cut at this month’s meeting.
📉 Fixed Income: A Volatility Hedge?
Bonds helped offset equity declines in February, with the U.S. Aggregate Bond Index up 2.6%. With shifting market conditions, fixed income could play a key role in reducing portfolio volatility.
📈 Yield Curve Developments
The Treasury yield curve flattened in February, with long-term yields dropping 30-40 basis points. This suggests investors are shifting toward safer assets as economic uncertainty lingers.
📩 Want to discuss how these trends impact your financial plan? Reach out anytime!
