Market Update – 3/12/2025

Dear Client-

It has been a volatile start to the week as trade policy tensions, specifically escalating tariff disputes, have begun to weigh on consumer and business confidence and, in turn, expectations for near-term economic growth.

The S&P 500 has pulled back in response and now sits about 9% below its all-time closing high in late February. A key technical measure, the Relative Strength Indicator (RSI), has now dropped to 28. While past performance is not indicative of future results, a reading below 30 is considered “oversold” and has frequently preceded market rebounds in the months that follow, as shown below. No single metric can predict short-term outcomes with certainty, however, selling into weakness has historically proven to be detrimental to long-term investment success.

Market bottoms tend to take shape slowly, demanding patience as volatility persists. While technical indicators like the RSI suggest a possible turning point, sentiment remains clouded by a number of uncertainties, including trade policy, taxation, regulatory changes and DOGE’s unwind of fiscal excess. Adding to the complexity, the Federal Reserve’s pivot from forward guidance to a strictly data-driven approach to monetary policy amplifies unpredictability. Navigating such turbulent periods calls for discipline.

Recoveries are rarely linear, but they can yield substantial rewards. History shows that some of the market’s most robust gains have emerged from moments of uncertainty. Staying invested positions you to seize sharp rebounds, often sparked by sudden resolutions to overhangs, a dynamic especially pertinent on the trade policy front given the Trump administration’s dealmaking tendencies. Similarly, enhanced volatility stemming from the Fed’s policy shift cuts both ways. This week it tilted positive with one measure of inflation, the Consumer Price Index (CPI), coming in lower than expected which provided a lift to markets, at least temporarily.

As we noted last week, missing even a handful of the market’s best days—often due to ill-timed exits—can drastically undermine long-term returns, as illustrated below. Patience and resilience remain key to capturing the upside.

We remain committed to the long-term health of your portfolios and continue to closely monitor the potential impact of policy initiatives and underlying trends in the economy.

If you have any questions, please feel free to reach out.