Policy Uncertainty Weighing on Market Sentiment: The back and forth on various policy initiatives, namely tariffs, weighed on equity markets in March.
Currently a Disconnect Between Survey and Hard Economic Data: Survey and sentiment data have fallen dramatically over the last 6 weeks while gauges of the labor market and economic growth have remained resilient.
Quiet Month for Rates: The 10-year US Treasury bounced between 4.15% and 4.36% during the month.
Technology Shares Have Begun to Re-rate: Technology has been the worst performing S&P 500 sector as questions over capital needs for artificial intelligence have led valuations to re-rate lower.
Haven’t Yet Seen Any Notable Increase in Jobless Claims: Federal workforce reductions have yet to have much impact on the weekly data and we have not seen an increase in continuing claims.
Remain Cautiously Optimistic for 2025: While we continue to believe the economy is in a good place and maintain a positive outlook, we believe it’s a good time to revisit your overall allocation to make sure it aligns with your long-term goals.
Equity Markets
US equity indices continued their decline in March, extending the downtrend that began in mid-February. Positive economic data was overshadowed by growing uncertainty and weaker survey data, which have been more prevalent recently. The S&P 500 ended the month down -5.6%, bringing its year-to-date loss to -4.3%. The Nasdaq was hit hardest, falling -6.8% in March and -10.3% for the year, while the Dow Jones Industrial Average proved to be the relative outperformer, dropping only -4.1% for the month and -0.9% the year.
As the chart below illustrates, trade policy uncertainty in the US has surged. This, combined with the messaging around various policy initiatives from the current administration, has contributed to declines in both consumer and business sentiment. While we continue to argue that the economy remains strong, with “hard” data supporting this view, we recognize that the longer that this uncertainty leads to lower consumer and business sentiment, the higher the likelihood that the “soft” data will begin to impact the “hard” data and the more economic growth will be negatively impacted. A key example is the personal spending data for January and February, which came in lower than expected. If purchasing decisions continue to be delayed, the potential negative impact on economic growth will grow. The silver lining is that personal income increased in both months, leading to a better savings rate, which could boost spending once consumer sentiment improves. However, for this to happen, clarity and certainty around trade and other policy initiatives are essential. Markets hate uncertainty and at the moment we have plenty of it.
Additionally, large-cap technology companies are facing ongoing pressure and their valuations have re-rated, exacerbated by the fallout from Deepseek and growing concerns about capital spending levels and the returns expected from artificial intelligence investments. As a result, technology has been the worst-performing sector in the S&P 500 in 2025, down -12.7%. We believe the impact on the world and the global economy from artificial intelligence will be profound, but any questions on how much capital is needed in the space will lead to bumps in the road which until this year was a very stable path higher.
Sentiment vs Data
Sentiment vs Data
Performance Review & Outlook
Highlights
Policy Uncertainty Weighing on Market Sentiment: The back and forth on various policy initiatives, namely tariffs, weighed on equity markets in March.
Currently a Disconnect Between Survey and Hard Economic Data: Survey and sentiment data have fallen dramatically over the last 6 weeks while gauges of the labor market and economic growth have remained resilient.
Quiet Month for Rates: The 10-year US Treasury bounced between 4.15% and 4.36% during the month.
Technology Shares Have Begun to Re-rate: Technology has been the worst performing S&P 500 sector as questions over capital needs for artificial intelligence have led valuations to re-rate lower.
Haven’t Yet Seen Any Notable Increase in Jobless Claims: Federal workforce reductions have yet to have much impact on the weekly data and we have not seen an increase in continuing claims.
Remain Cautiously Optimistic for 2025: While we continue to believe the economy is in a good place and maintain a positive outlook, we believe it’s a good time to revisit your overall allocation to make sure it aligns with your long-term goals.
Equity Markets
US equity indices continued their decline in March, extending the downtrend that began in mid-February. Positive economic data was overshadowed by growing uncertainty and weaker survey data, which have been more prevalent recently. The S&P 500 ended the month down -5.6%, bringing its year-to-date loss to -4.3%. The Nasdaq was hit hardest, falling -6.8% in March and -10.3% for the year, while the Dow Jones Industrial Average proved to be the relative outperformer, dropping only -4.1% for the month and -0.9% the year.
As the chart below illustrates, trade policy uncertainty in the US has surged. This, combined with the messaging around various policy initiatives from the current administration, has contributed to declines in both consumer and business sentiment. While we continue to argue that the economy remains strong, with “hard” data supporting this view, we recognize that the longer that this uncertainty leads to lower consumer and business sentiment, the higher the likelihood that the “soft” data will begin to impact the “hard” data and the more economic growth will be negatively impacted. A key example is the personal spending data for January and February, which came in lower than expected. If purchasing decisions continue to be delayed, the potential negative impact on economic growth will grow. The silver lining is that personal income increased in both months, leading to a better savings rate, which could boost spending once consumer sentiment improves. However, for this to happen, clarity and certainty around trade and other policy initiatives are essential. Markets hate uncertainty and at the moment we have plenty of it.
Additionally, large-cap technology companies are facing ongoing pressure and their valuations have re-rated, exacerbated by the fallout from Deepseek and growing concerns about capital spending levels and the returns expected from artificial intelligence investments. As a result, technology has been the worst-performing sector in the S&P 500 in 2025, down -12.7%. We believe the impact on the world and the global economy from artificial intelligence will be profound, but any questions on how much capital is needed in the space will lead to bumps in the road which until this year was a very stable path higher.
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Aspirations are what help make goals reality.