DFG Navigator Archives | 2025

Your Capital Markets Snapshot: Markets Dip Amid Tariff Uncertainty; Bonds Show Strength

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.

Your Capital Markets Snapshot: Heightened Volatility Persisted Last Week

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.

Your Capital Markets Snapshot: Navigating Volatility with Long-Term Confidence

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.

Market Update: April 4, 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: Tariffs, Inflation, and Market Volatility

Last week, equity markets experienced significant volatility due to the announcement of a 25% tariff on all non-U.S. made autos, which is set to take effect on April 3. This move led to a decline in shares of automakers and parts suppliers, particularly in countries with large auto exposure like Germany and South Korea. Additionally, consumer confidence waned, and core PCE prices increased more than expected, suggesting higher inflation pressures and further dampening investor sentiment. Personal spending came in softer than expected, indicating higher prices might be impacting consumer behavior. Despite these challenges, corporate profits are rising, and the private sector continues to add jobs at a healthy pace. The Federal Reserve is maintaining a wait-and-see approach before taking any further action with respect to interest rates. Once the focus on tariffs passes, there is potential for pro-growth policy measures being announced in the second half of the year. Given the heightened uncertainty in the markets, it remains prudent to ensure portfolios are sufficiently diversified.

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.

Your Capital Markets Snapshot: Markets Displayed a Combination of Optimism and Caution

Last week was mixed for capital markets. US equity markets initially crept upward, with the S&P 500 and Nasdaq posting new all-time highs in the first half of the week. However, weaker than expected retail spending data led to all three major US indices posting losses for the week. Two trends we are monitoring to begin this year include: 1.) U.S. mega-cap technology stocks are lagging the broader market after their recent dominance in 2023 and 2024; and 2.) International equities, largely driven by European markets, are outperforming their U.S. counterparts. Despite some weak economic releases, Treasury yields continue to stabilize after rising for much of September 2024 – January 2025. Last week rates slightly eased falling between 0-8 basis points. Overall, markets displayed a combination of optimism and caution, highlighting the importance of diversification across sectors and regions.

Your Capital Markets Snapshot: Inflation Data Came In Hotter than Expected

Last week, inflation data came in hotter than expected, with the Consumer Price Index (CPI) rising 0.5% month-over- month and 3% year-over-year. The Federal Reserve continues to suggest patience in their approach to cutting rates as inflation stubbornly remains above their 2% target. Expectations for multiple rates cuts this year continue to moderate. International equity markets outperformed their U.S. counterparts, fueled by strong weeks from the German DAX and Stoxx 600. Year to date, both international developed and emerging markets are outpacing U.S. equities of all sizes. Despite the poor inflation readings, the S&P 500 and NASDAQ recorded weekly gains, nearing their all-time highs. So far this year, markets have proven resilient, especially in the face of new tariff announcements and warmer inflation data.

Your Capital Markets Snapshot: The U.S. Economy Continues to Show Solid Growth

The U.S. economy continues to show solid growth with Q4 2024 real GDP growing at an annualized rate of 2.3%, just below expectations of 2.5%. US GDP growth was driven primarily by consumer spending, which increased 4.2% annually (its highest level since Q1 2023). The Federal Reserve held interest rates steady, maintaining a patient approach amid solid economic growth, a healthy labor market, and stubborn inflation trends. Earnings season kicked off with strong results from companies like Apple, Microsoft, and Meta, although Tesla missed estimates. Technology stocks, particularly Nvidia and other chip manufacturers, experienced volatility following Monday’s news from Chinese AI startup DeepSeek that it developed an AI program comparable to OpenAI’s ChatGPT using a fraction of the development costs and computational resources. Much of the sector rebounded later in the week, as the news from DeepSeek was spun as a positive for increasing development and adoption of AI-related technologies. Overall, the S&P 500 is on track for strong earnings growth, with expectations for continued momentum into 2025.

Your Capital Markets Snapshot: Stocks Maintained their Bullish Momentum

Last week, stocks maintained their bullish momentum, driven by a pro-growth fiscal policy shift from the incoming Trump administration. The S&P 500 reached a fresh all-time high (ATH) during the week, while the Dow and NASDAQ also recorded gains but remain below their previous ATHs. Bitcoin prices also hit a new ATH above $109,000 on Inauguration Day before trending down and ending the week essentially flat, fueled by optimism over the administration's crypto- friendly stance. Additionally, Meta Platforms announced a significant increase in AI infrastructure investment, which appeared to reflect positively on its stock price. Despite these positives, there are still concerns about potential inflationary pressures and the trajectory of Treasury yields, particularly longer-term yields. Overall, the market sentiment remained positive, supported by healthy economic indicators and earnings growth.

Your Capital Markets Snapshot: A Strong Positive Week for Most Asset Classes

Last week was a strong positive week for most asset classes, with particularly strong returns for US equities and Bitcoin. The benchmark 10-year Treasury yield briefly reached a 14-month high of 4.8% before retreating due to encouraging inflation data, with core CPI unexpectedly edging lower. Despite strong economic growth and policy uncertainty, the Federal Reserve showed no urgency to cut rates further, leading investors to scale back their expectations for rate cuts this year. The start of the earnings season highlighted the influence of corporate profits on stock market performance, with banks reporting strong results. Overall, the markets saw a mix of volatility and positive momentum, driven by economic and corporate strength.

Your Capital Markets Snapshot: Markets Experienced a Mix of Positive Economic Data

Last week, markets experienced a mix of positive economic data and political developments. Labor market data exceeded expectations, with significant job gains and declining unemployment rates. However, this strong economic performance led to a reassessment of the likelihood of central-bank rate cuts in 2024, as more participants are expecting a pause in cuts and expectations for only one rate cut in the back half of the year are increasing. Changes to interest rate expectations and the strong economic data led government bond yields to rise and stock markets to decline. Despite these changes, the overall economic fundamentals remain resilient, evidenced by strong job gains, decreasing unemployment, and positive economic growth.

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