U.S. Markets
Stocks fell in the first quarter as investors contended with economic uncertainty, inflationary concerns, and evolving tariff talks. The Standard & Poor’s 500 Index slid 4.59%, while the tech-heavy Nasdaq Composite dropped 10.42%. The Dow Jones Industrial Average fared best, sliding only 1.28%.1
January’s Black Swan
Stocks rallied in January on upbeat business and economic messaging from the White House. However, tech stocks pulled markets lower later in the month on news that a Chinese start-up had developed a competitive artificial intelligence (AI) model that performed as well as its Western counterparts at a fraction of the cost.2 As the month came to a close, investors evaluated whether it was indeed a “black swan” event or just another development in the fast-moving world of AI.2
February’s New High
Stocks hit new highs following February’s Presidents’ Day holiday. But stubborn inflation, mixed economic signals, and an evolving trade policy tempered enthusiasm. As the month came to a close, an upbeat inflation report led to a powerful rally, which helped limit losses.3,4
Ongoing Trade Talks in March
March was a different story, however. Stocks trended lower throughout the month as fast-moving trade policy updates unnerved investors. Things improved slightly by mid-month as a choppy rally attempt tried to take shape. But sellers gained the upper hand in the final full week of trading on a mixed inflation report and souring consumer sentiment.5
The Fed
The Federal Open Market Committee (FOMC) held rates steady at both of its meetings in Q1.
Testifying before the Senate Banking Committee on February 10, Chair Powell told lawmakers the Fed doesn’t “need to be in a hurry” to lower interest rates further, given the economy was currently “strong overall.”10
At its March meeting, Fed Chair Jerome Powell acknowledged that progress toward their 2% inflation target is “probably delayed for the time being.” He said that the Fed maintains its wait-and-see stance toward tariffs and their longer-term impact on inflation.11
The FOMC’s next meeting is scheduled for May 6-7.11
What Investors May Be Talking About in April
In the month ahead, investors will stay focused on the global impact of President Trump’s new tariffs, viewing it as a pivotal moment that could reshape trade dynamics. While markets have experienced sharp movements, many see volatility as an opportunity to reposition portfolios for long-term growth. Amid these shifts, caution remains high as investors weigh risks against opportunities in an uncertain economic landscape.
On another note, companies will start to release their Q1 corporate reports, which may provide some insights into what will drive the economy in the future.
One of the best ways to understand chief executive officers’ thoughts is to analyze the words or terms they use during their conference calls with shareholders.
In Q4 2024, 241 of the S&P 500 companies cited the term “AI” during their calls. By contrast, only 13 mentioned the word “recession,” the lowest level since Q1 2018.7,8
Two hundred and thirty CEOs cited the term in Q4, which is down from more than 400 in Q1 2022.9
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1. WSJ.com, March 31, 2025
2. CNBC.com, January 27, 2025
3. CNBC.com, February 19, 2025
4. WSJ.com, February 28, 2025
5. WSJ.com, March 28, 2025
6. Sectorspdrs.com, March 31, 2025
7. Insight.FactSet.com, March 14, 2025
8. Insight.FactSet.com, March 10, 2025
9. Insight.FactSet.com, March 17, 2025
10. CNBC.com, February 11, 2025
11. WSJ.com, March 19, 2025
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