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Published : 01 Apr 2025, 09:15 AM
The S&P 500 and the Nasdaq Composite posted on Monday their worst quarterly performances since 2022, as uncertainty around the Trump administration's economic agenda roiled US equity markets in the first quarter of 2025.
The two benchmarks also suffered heavily in March, recording their biggest monthly percentage drops since December 2022, as President Donald Trump rolled out a swathe of new tariffs which raised fears of a global trade war that would hurt economic growth and spur inflation.
For the quarter, the S&P 500 slumped 4.6%, while the Nasdaq Composite plummeted 10.5%. The Dow Jones Industrial Average was not immune to the unease, slipping 1.3% in the opening three months.
"Investors, more or less in this first quarter, threw their hands in the air, as you really cannot trade around this," said Adam Turnquist, chief technical strategist for LPL Financial.
The Magnificent Seven technology names, which drove markets higher over a bull market which stretched through 2023 and 2024, weighed heavily on U.S. equity markets as investors sold off growth names.
Tesla was down almost 36% in the first quarter, and Nvidia dropped nearly 20%.
"Our big lesson from the first quarter is diversification is not dead," said Michael Reynolds, vice president of investment strategy at Glenmede.
"Whether you're looking between, or within, asset classes, if you avoided the perils of market concentration, you actually held up quite a bit better versus some of the headline indexes."
While information technology .SPLRCT and consumer discretionary .SPLRCD - both sectors with heavy influence from big-tech names - posted double-digit percentage declines for the quarter, a majority of the 11 S&P sectors were higher in the same period, led by energy's .SPNY 9.3% increase.
On Monday, both the S&P 500 and the Dow temporarily shook off the uncertainty around the Trump administration's upcoming tariff plans, which are expected to be outlined in greater detail on Wednesday.
Trump said on Sunday that expected tariffs he is set to announce will include all nations. He has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on goods from China.
The S&P 500 gained 30.91 points, or 0.55%, to 5,611.85 points, and the Dow Jones Industrial Average rose 417.86 points, or 1%, to 42,001.76. The Nasdaq Composite lost 23.70 points, or 0.14%, to 17,299.29.
Financial stocks helped boost the S&P 500 on Monday. Both Discover Financial Services and Capital One Financial advanced, up 7.5% and 3.3% respectively, as investors bet their merger would ultimately be approved by regulators.
The S&P 500 consumer staples index, often considered a safe haven within stock markets, was the leading sector though with its 1.6% increase. Energy also rose, tracking a jump in crude prices.
The CBOE Volatility Index, Wall Street's so-called fear gauge, jumped to a two-week high at 22.28 points.
As a result of tariff uncertainties, Goldman Sachs raised the probability of a US recession to 35% from 20%, cut its year-end target for the S&P 500 to 5,700, and forecast more interest rate cuts by the Federal Reserve.
Focus this week will also be on economic data, including ISM business activity surveys and the crucial non-farm payrolls report. Also due this week are speeches from several US central bank officials, including Fed Chair Jerome Powell.
Drugmakers' shares slid after reports the US Food and Drug Administration's top vaccine official had been forced to resign. Moderna dropped 8.9%.
Gene therapy companies Taysha Gene Therapies and Solid Biosciences fell 28% and 14.4%, respectively.
In deals news, Rocket Companies was down 7.4% after the mortgage lender said it agreed to a $9.4 billion acquisition of Mr. Cooper Group. The announcement, though, sent the mortgage servicer's stock up 14.5%.
