March 1, 2025 Market Update

Continued investor anxiety led to another volatile week on Wall Steet.  The S&P 500 declined by 0.98%, while the Nasdaq tumbled by 3.47%.   The Russell 2000, which represents smaller companies, fell by 1.47%.  In contrast, the Dow, buoyed by large-cap value stocks, showed resilience, gaining 0.95%.  

All major U.S. equity indexes posted losses for the month, with the Nasdaq and Russell 2000 being the worst performers, down 3.9% and 5.5%, respectively.

On a more positive note, the 10-year Treasury yield fell 19 basis points, lifting bond prices.  The broader U.S. bond market, as tracked by the Vanguard Total Bond Market ETF (BND), rose by 1.23%, indicating sustained demand for safe-haven assets amid continued market uncertainty.

The stock market rally has lost steam recently, largely due to the struggles of the so-called ‘Magnificent 7’.  After leading the market’s gains last year, these tech giants have stumbled, weighing on the Nasdaq and raising questions about whether the leadership is shifting.  While the broader S&P 500 has held up better, its heavy concentration in mega-cap tech stocks in major indexes could prove to be problematic.

At the same time, international markets are quietly outperforming, and the long-held narrative of U.S. exceptionalism is showing signs of fading.  Since just before Trump took office, the Stoxx Europe 600 Index has gained 6.1%, and the Nasdaq Golden Dragon Index, which tracks U.S.-listed companies with business exposure to China, has jumped 13%.  By contrast, the S&P 500 has essentially been flat, dropping by a modest 0.7% in that time.  If this trend continues, it could mark a significant shift for global investors who have long favored U.S. stocks.

Meanwhile, wealthy consumers are driving a record share of spending.  According to Moody’s Analytics, the top-earning households now account for nearly 50% of all consumer spending—the highest percentage since records began in 1989.  With inflation cooling and stock market gains boosting household wealth, high-income consumers remain a critical pillar of economic strength.  However, their dominance also raises questions about broader economic resilience.  If this spending slows, will the rest of the economy be able to pick up the slack?

That’s all for now.  Have a great weekend and invest wisely my friends.