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Last week, stock markets couldn’t keep the positive momentum and experienced a modest decline, with the S&P 500 down 1.5% and the Nasdaq dropping around 2.6%. This was driven by uncertainty surrounding tariffs, particularly new export restrictions on semiconductors to China, which affected major U.S. semiconductor companies like NVIDIA. On the positive side, the bond market functioned more orderly, with government bond yields moving lower and the U.S. Aggregate bond index climbing about 1% for the week. The broader markets continue to be influenced by the tariff narrative. Given the increased uncertainty still present in the market, it is important to maintain discipline, ensure portfolio allocations are rebalanced to appropriate ranges and well-diversified. When possible, establish and maintain an emergency cash reserve to help weather any future volatility.

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Heightened volatility persisted last week, this time to both the up and downside as markets reacted to the news of pauses on reciprocal tariffs to all countries that did not retaliate. China was notably excluded and the back-and-forth escalation in tarifflevels with the US added to the volatility experienced last week. Equity markets rebounded off their recent skid but are still well off their February highs. Following the announcement of the tariff pauses, equity markets sharply jumped and posted one of the largest daily gains since World War II. Increased volatility should be expected in the near-term until more certainty emerges around the future of US and global trade policies. Breaking with typical market behavior, US Treasuries and the US Dollar experienced selloffs during this recent volatility shock. Often viewed as “safe haven” assets that investors seek during these episodes, instead last week saw a steepening of the yield curve as long-term rates rose by around 50 basis points.

Volatility continues to be the theme of 2025. Last week, the markets experienced a sharp selloff to end the week following the announcement of aggressive U.S. reciprocal tariffs by President Donald Trump. The tariffs, which included a 10% minimum on all imports and higher rates for countries with larger trade deficits, led to retaliatory measures from China. This sparked risk-off sentiment, causing equities to finish the week sharply lower and U.S. Treasury yields to decline to their lowest since October 2024. Despite the headwinds posed by tariffs, the U.S. economy entered this period from a position of strength, with healthy household balance sheets and labor-market conditions. Investors are advised to stick with their long-term investment strategies, emphasizing diversification to navigate the ongoing market volatility. As we have discussed previously, we believe time in the market is greater than timing the market.

In today's complex financial landscape, staying informed is key to making sound investment decisions and creating a secure financial future. Our job at DFG is to help our clients navigate the changing financial landscape within the context of their personal financial plan in a way that brings them confidence, comfort, and security. Toward this goal, below is the latest Market Update issued by Daken Vanderburg, CFA, the Chief Investment Officer of MassMutual Wealth Management, which provides commentary on the current state of the economy and explores the impact of tariffs on the markets.As always, the Davis Financial Group Team wants to hear from you – please share your thoughts, questions, and ideas with us at info@davisfinancialgroup.com or give us a call at (413) 584-3098.CRN202803-8317719

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