The quarter started on solid footing, with the S&P 500 reaching a record high on February 19. However, sentiment deteriorated rapidly in March, as equity markets sold off on a mix of disappointing earnings revisions, cracks in the AI investment narrative, and growing fears around protectionist trade policy. By the end of the quarter, the S&P had dipped into correction territory before recovering slightly, finishing just shy of 10% below its February peak. The Nasdaq fared worse, falling nearly 16% from its highs as mega-cap tech stocks—the so-called “Magnificent Seven”—collectively entered bear market territory.
April 16, 2025
Markets faced a sharp reversal in tone during the first quarter of 2025. After a strong finish to 2024, the S&P 500 fell 4.6%, marking its worst quarterly performance since Q3 of 2022. The Nasdaq declined 10.4%, and the small-cap Russell 2000 dropped 9.8%, weighed down by renewed concerns about economic growth, trade policy uncertainty, and the sustainability of the AI-fueled rally that dominated headlines last year.
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Investment Commentary
The quarter started on solid footing, with the S&P 500 reaching a record high on February 19. However, sentiment deteriorated rapidly in March, as equity markets sold off on a mix of disappointing earnings revisions, cracks in the AI investment narrative, and growing fears around protectionist trade policy.
