04.03.25 -- The first quarter of 2025 reminded investors how quickly sentiment can shift—and April 3rd reinforced that in a big way.
After the administration announced a broad new tariff plan, markets tumbled:
- Dow Jones: -1,679 points (-3.98%)
- S&P 500: -4.84%
- Nasdaq Composite: -5.97%
The hardest-hit sectors were consumer discretionary, energy, and technology, while consumer staples managed modest gains. The selloff reflects growing concern over global trade tensions, rising inflation risk, and the broader impact of policy uncertainty.
It was a tough day—but not a surprising one. Volatility is part of investing. And what matters most is how we respond when it shows up.
Q1 in Review: From Confidence to Complexity
The year began with momentum. Markets rallied into Inauguration Day, encouraged by expectations of tax cuts, deregulation, and a pro-business tone. But optimism faded quickly as policy uncertainty, shifting Fed expectations, and renewed trade fears entered the picture.
- S&P 500: down 4.6% in Q1
- Nasdaq: down 10.4%
- Small caps: down nearly 10%
- Bonds: up nearly 3%, showing renewed strength
- International developed stocks: up over 7%, particularly in Europe
Much of the quarter was shaped by a pivot in sentiment. Today's steep selloff illustrates how fast markets can recalibrate in the face of new headlines.
Tariff Shock: Markets React to Policy Risk
The newly announced trade initiative includes:
- A 10% universal tariff on nearly all U.S. imports (effective April 5)
- Higher targeted tariffs on China (54%), Japan (24%), EU (20%), and UK (10%)
- Exemptions for Canada and Mexico, though they may still face future trade actions
Markets responded by pricing in higher inflation risk, slower global growth, and deeper uncertainty. Treasury yields dropped on recession fears, and key equity sectors pulled back sharply.
These kinds of policy-driven moves are difficult to anticipate. The true economic impact of tariffs—on sourcing, pricing, and supply chains—will play out over quarters, not days.
Putting Recent Volatility in Context
With the Nasdaq officially in correction territory and the S&P 500 approaching that mark, many investors are understandably on edge. Recent swings, both up and down, can create the feeling that progress is stalling. But stepping back can help:
- The S&P is back to where it was just seven months ago
- Since WWII, market corrections (declines of ~10%) have occurred regularly and have historically recovered over time
- Recoveries tend to start quietly—often when confidence is still low
Just like the changing seasons, downturns can feel long when you're in them—but they eventually give way to growth.
Why Perspective (Not Reaction) Makes the Difference
It's natural to feel pulled toward action during times like these. But history shows that reacting emotionally during volatility often leads to poorer outcomes.
Trying to time exits and re-entries rarely works. Missing just a few of the best market days—many of which come on the heels of the worst—can significantly reduce long-term returns. Even with perfect hindsight, the payoff for tactical moves is often marginal. The risk of being wrong is much greater.
That's why staying aligned with a clear financial plan, built around long-term goals and diversified investments, remains the most effective way to manage through periods like this.
What We're Watching
- Trade Policy Fallout: Will there be global retaliation—or movement toward compromise?
- Inflation Path: Still elevated, though models suggest possible easing by summer
- Valuations: Even after recent declines, broad markets remain about 12% over long-term historical averages
- Sector Leadership: Tech and energy led the decline today, but other sectors like healthcare and staples held up better—another argument for broad diversification
Bottom Line
Today was a hard market day. So was much of Q1. But corrections and volatility, while uncomfortable, are not unusual. They are part of investing. If your approach is:
- Long-term focused
- Diversified across asset classes
- Built with planning and flexibility in mind
…then it's doing what it was designed to do.
If you're unsure, or if you want to revisit your plan in light of recent events, let's connect. The goal isn't to predict what's next—it's to stay prepared, stay steady, and stay focused on what matters most.