US stock markets posted the second consecutive negative month with the S&P 500 losing 5.6% in March.
US trade policy and the imposition of tariffs on foreign goods have dominated headlines and led to increased volatility in the US markets, particularly in the technology sector which has shed nearly $2 trillion in market capitalization.
Inflation remains elevated, giving investors less confidence that the Federal Reserve will lower rates as soon or as aggressively as previously predicted.
Defensive sectors proved most resilient with Energy, Utilities, and Health Care leading the way while Technology and Consumer Discretionary sectors were the primary laggards for the month.
Bonds were relatively flat as investors balanced “flight to quality” with lower likelihood of rate cuts from the Fed.
Global economic growth is expected to remain positive, however, US growth has been slowing.
Inflation pressures continue to weigh on the ability for the Fed to loosen monetary policy which could pressure both stock and bond prices for the remainder of 2025.
University of Michigan’s consumer confidence survey shows an 11.9% drop from February and 28.2% from a year ago with inflation cited as the key deterrent to consumer spending.
We expect continued volatility as markets digest the impacts of trade policies and its impact on inflation and consumption.
Allocations to defensive segments of the market and hedged strategies may help buffer against short-term volatility in portfolios.
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Index Disclosure
An index typically measures the performance of a basket of securities intended to replicate a certain area of the market, asset class or geopolitical region among others. Indices do not represent investments in actual accounts. Investors cannot invest directly in an index. The asset classes noted here reflect the following indices: “U.S. Large Cap” represented by the S&P 500 Index. “U.S. Small Cap” represented by the S&P 600 Index. “International” represented by the MSCI Europe, Australasia, Far East (EAFE) Net Return Index. “Emerging” represented by the MSCI Emerging Markets Net Return Index. “U.S. Aggregate” represented by the Bloomberg U.S. Aggregate Bond Index. “Treasuries” represented by the Bloomberg U.S. Treasury Bond Index. “Short Term Bond” represented by the Bloomberg 1-5 year gov/credit Index. “U.S. High Yield” represented by the Bloomberg U.S. Corporate High Yield Index. “Real Estate” represented by the Dow Jones REIT Index. “Gold” represented by the LBMA Gold Price Index. “Bitcoin” represented by the Bitcoin Galaxy Index.