Market Summary March 2025

March 2025 Market Summary

After the First Quarter, the Score is…

The first quarter has concluded – and it saw equities decline.

• Dow Jones: -1.27%
• S&P 500: -4.59%
• Nasdaq: -10.42%

This is only the seventh Q1 since 2000 where all three major U.S. indices posted negative Q1 returns. The worst Q1 in this 26-year timespan was in 2020, when the Dow, S&P, and Nasdaq posted negative returns of -23.2%, -20.0%, and -14.2%, respectively.

Equity Performance: U.S. Stock Indices Tumble in March, Only Two of Eleven Sectors Positive

Domestic equity indices fell further into the red to end Q1 as the North-American stock slide continued, influenced by macro events such as the U.S.-Canada trade war. The Dow Jones Industrial Average fell 1.3%, the S&P 500 slipped 4.6%, and the Nasdaq Composite tumbled 10.4%. Developed EAFE Markets dipped only 0.3%, while Emerging Markets posted a 0.7% gain. This market movement was a continuation of patterns that occurred in February.

Only two of the eleven sectors posted a positive return in March: Energy and Utilities. The worst performers were the cyclically sensitive sectors of Consumer Discretionary and Technology, both of which fell 8.3%. Communication Services was the third-worst, down 5.2%.

Fixed Income Performance: Insights into Bond ETFs and Treasury Yields

The yield curve posted no significant moves across any duration in March, which led to relatively muted bond fund performance. The biggest gainer was the Vanguard Short-Term Bond Index Fund ETF (BSV), while the iShares 20+ Year Treasury Bond ETF (TLT) slipped 1.2%.

US Treasury Yield Curve

1 Month Treasury Rate: 4.38%

3 Month Treasury Rate: 4.32%

6 Month Treasury Rate: 4.23%

1 Year Treasury Rate: 4.03%

2 Year Treasury Rate: 3.89%

3 Year Treasury Rate: 3.89%

5 Year Treasury Rate: 3.96%

10 Year Treasury Rate: 4.23%

20 Year Treasury Rate: 4.62%

30 Year Treasury Rate: 4.59%

Economic Data Overview: Gold Soars to New All-Time High While Cryptocurrency Prices Plummet, Inflation Falls Back Below 3%

The price of Gold surged above $3,000 per ounce for the first time, setting another new all-time high. At the same time, high-risk assets such as cryptocurrencies dove further in March. Inflation continued to decline, while the Fed held the Fed Funds Rate for the second consecutive FOMC meeting. As of April 1st, 2025, investors expect them to do the same at the May meeting, according to the CME FedWatch tool.

Employment

The unemployment rate ticked up to 4.1% after falling to 4.0% for the first time since May 2024 in January, while the labor force participation rate fell by two-tenths of a percentage point to 62.4%. Nonfarm payroll data showed that the U.S. economy added 151,000 jobs in February, falling short of the expected 170,000 consensus figure.

Consumers and Inflation

The US inflation rate leveled off at 2.82% in February after reaching 3% for the first time since May 2024. Core inflation also took a dip from 3.26% in January to 3.12% in February. The US Consumer Price Index rose 0.22% month over month, and US Personal Spending rebounded 0.43% MoM after contracting last month for the first time since March 2023.

The Federal Reserve maintained its key Fed Funds Rate target range of 4.25%-4.50% at the FOMC’s March 19th meeting. The next meeting will take place May 7th, where investors anticipate the Fed Funds Rate to remain unchanged for the third consecutive meeting, according to the CME FedWatch tool.

Production and Sales

The US ISM Manufacturing PMI fell by 1.3 points in March to 49.0, putting the index back in contraction territory after being above 50 for the last two months. The Services PMI improved by 0.7 points between January and February, bringing its latest reading up to 53.50. The YoY US Producer Price Index declined to 3.17% in January, while US Retail and Food Services Sales improved 0.20% MoM between January and February.

Housing

Both types of home sales rebounded in February. US New Single-Family Home Sales improved 1.81% MoM in February, and Existing Home Sales rose 4.16% MoM. The Median Sales Price of Existing Homes increased by 1.27% to $398,400, but remains 6.68% off its all-time high. Mortgage rates did not post significant moves in March; the 15-year Mortgage Rate ended up at 5.89% in the last week of March, while the 30-year settled at 6.65%.

Commodities

The price of gold set another all-time high in March, surging 10.2% in March to end the month at $3,122.67 per ounce in US Dollars. Oil prices moved in the opposite direction; Brent crude oil fell 1.1% in March to $73.96 per barrel as of March 24th, while the price of WTI slipped 0.7% to $69.46 per barrel as of the same date. The average price of gas increased another 3 cents MoM to $3.28 per gallon.

Cryptocurrencies

The prices of major cryptocurrencies took another dive in March. Bitcoin fell 2.78% in March to $84,709.14, bringing it down 11.1% YTD and 22.4% off of its all-time high. Ethereum tumbled 21.7% to $2,305.32, pushing it down 46.3% YTD and 62.5% below its all-time high.

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