DFG Navigator Archives | March 2025

Your Capital Markets Snapshot: Fed Holds Rates as Markets Shift

Last week, the Federal Reserve decided to keep the federal funds rate unchanged, reflecting a cautious approach amid slowing economic growth and policy uncertainty. Notable observations from the Fed’s meeting include their expectations for slowing GDP growth and higher inflation in the short-term plus plans to slow its balance sheet reduction program in April. By week’s end, U.S. stocks experienced a slight recovery from correction territory but remain down year-to-date. International stocks, particularly in Europe and China, continue to deliver impressive performance to start the year. In the U.S. fixed income markets, bond yields declined, leading to higher bond prices and solid returns. So far this year, investment-grade bonds and emerging-market debt are performing particularly well. The U.S. economy showed signs of cooling from its above-trend pace, but the labor market remained healthy, and manufacturing sectors indicated a recovery.

Your Capital Markets Snapshot: Volatility Continues to Rattle US Equity Markets

Volatility continues to rattle US equity markets, and 2025 continues to highlight the importance of diversification. Last week the S&P 500 dipped into correction territory, down just over 10% from its February highs. The technology-heavy Nasdaq has experienced a more substantial decline of about 14%. This recent downturn is normal, US equity markets average about one 10% correction each year. Increased uncertainty around US trade policy, inflation, and geopolitics means volatility may remain elevated in the near-term. However, the U.S. economy is growing and corporate earnings are strong. These are two bullish indicators that can help anchor markets as the uncertainty resolves itself. Despite the recent downturns, certain sectors within U.S. equities, such as value and cyclical stocks, as well as international markets, like Europe and China, have provided pockets of growth. Bonds have outperformed stocks and provided modestly positive returns so YTD. These opportunities highlight the importance of maintaining a well-diversified portfolio.

Market Update: March 10, 2025

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

Your Capital Markets Snapshot: U.S. Economic Growth is Showing Signs of Slowing

U.S. economic growth is showing signs of slowing, with key indicators like retail sales and personal spending surprising to the downside. This slowdown comes amid heightened policy uncertainty, particularly around tariffs and government funding. Markets have reacted defensively, with sectors like health care and consumer staples leading, while technology and consumer discretionary sectors lag. The S&P 500 is negative for the year, as markets continue to consolidate after the last two years of over 20% growth. International equities continue to outperform their US peers, highlighting the importance of diversification in a portfolio context. Additionally, bond markets have seen support as Treasury yields moved lower, reflecting renewed market expectations of multiple potential Fed rate cuts this year. Despite these challenges, the U.S. economy started the year from a position of strength, and there are no immediate concerns of a looming recession.

Your Capital Markets Snapshot: Equity Markets Experienced Notable Volatility

Last week, equity markets experienced notable volatility. The S&P 500 briefly erased its year-to-date gains, driven by growth concerns, trade uncertainty, and deteriorating consumer confidence. Despite these challenges, there are still supporting factors such as positive economic growth, a steady labor market, and strong spending on AI. The Magnificent 7, which had previously led the market, entered correction territory, contributing to the broader index's sideways movement over the past three months. Diversification remains critical, as leadership has shifted away from U.S. large-cap and tech stocks. Overall, while market volatility may persist, the recipe for continued economic expansion and a continuation of the current bull market in stocks remain intact.

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