In the first quarter of 2025, the S&P 500 and the Nasdaq Composite indices posted their worst quarterly performances since 2022. Uncertainty around the Trump administration’s economic agenda, in particular their plans to impose wide-raging international trade tariffs weighed heavily of U.S. equity markets in the first three months of 2025.
The stock market fears that new tariffs will bring a global trade war that would cause recession and spur inflation. A combination of economic decline and high inflation creates a dangerous situation, called stagflation.
In March 2025, two major benchmarks of the American stock market recorded their biggest monthly percentage drops since December 2022. The S&P 500 dropped 5.8%, while the Nasdaq Composite declined 8.2%. For the quarter, the S&P 500 slumped 4.6%, while the Nasdaq Composite plummeted 10.4%. The Dow Jones Industrial Average also declined, dropping 1.3% over January-March.
Reuters quoted Adam Turnquist, chief technical strategist for LPL Financial as saying, “Investors, more or less in this first quarter, threw their hands in the air, as you really cannot trade around this.”
Among the most notable developments in the first quarter was the decline of technology stocks, which drove markets higher over the previous two years. Tesla was down almost 36% in the first quarter, and Nvidia dropped nearly 20%.
The main Canadian index S&P/TSX Composite was down 1.9% in March but rose slightly, by 0.8%, over the first quarter. Yahoo Finance quoted a manufacturer in the food, beverage and tobacco products industry, who said in the ISM’s survey: “Starting to see slower-than-normal sales in Canada, and concerns of Canadians boycotting U.S. products could become a reality.”
On Monday and Tuesday this week, the American markets tried to shake off the uncertainty around the Trump administration’s upcoming tariff plans, which were expected to be outlined in greater detail on Wednesday. On Monday, the S&P 500 rose by 0.6%, while the Dow Jones Industrial Average grew by 1.0%.
At the same time, the general mood in the markets remains quite gloomy. Global investment bank Goldman Sachs has just raised the probability of a U.S. recession this year from 20% to 35%, cut its year-end target for the S&P 500 to 5,700 points (it was 5,612 at the close on March 31), and forecast more interest rate cuts by the Federal Reserve.
For the stock markets, much will depend on the tariff announcement on Wednesday and whether the announcement will clarify the U.S. and global trade and economic outlook or make it even more ambiguous.
Michael Zienchuk, MBA, CIM
Investment Advisor, Credential Securities Inc.
Manager, Wealth Strategies Group
Ukrainian Credit Union
416-763-5575 x204
mzienchuk@ukrainiancu.com
www.ukrainiancu.com
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