BFG Newsletters

Markets finished lower as an early-week rally faded into a late-week selloff. Stocks initially rallied as President Trump said the “war is very complete, pretty much” and oil prices plunged, but the strength reversed as geopolitical tensions escalated and oil rebounded. The S&P 500 fell 2%, with Energy the only sector in positive territory. The Nasdaq had a smaller decline of 1.5% as investors rotated toward tech stocks and mega caps amid the volatility, while the Russell 2000 declined by 3%. Bonds also traded lower as rising oil prices and inflation concerns pushed Treasury yields higher. Commodities were mixed: oil rebounded toward $100 per barrel as the Strait of Hormuz remained closed, while gold posted a modest loss despite the market volatility. The week ended with tensions unresolved.

February offered a tale of two markets. On the surface, the S&P 500 declined 0.8%, but beneath that headline number, a notably healthier picture emerged. The equal-weighted S&P 500 gained 3.5%, Large Cap Value rose 2.6%, and the Russell 2000 added 0.8%, a clear signal that market participation is widening. The narrow dominance of mega-cap technology stocks that defined much of the prior bull market cycle appears to be giving way to a more broadly distributed rally. Diversified investors, often frustrated during the period of tech-led concentration, are beginning to see their patience rewarded.

Markets navigated a complex environment in the fourth quarter. The quarter began with a government shutdown, which lasted 43 days and delayed key economic data releases. The lack of timely information made it difficult to assess the economy’s strength and contributed to periods of volatility as the market reacted to incomplete information.

Markets carried their strong momentum from the second quarter into the third quarter, with the S&P 500, Nasdaq, and Russell 2000 each hitting new highs. Investor sentiment remained optimistic despite soft labor market data and mixed economic signals, and stocks traded higher due to strong corporate earnings, the Federal Reserve’s resumption of rate cuts, and easing trade tensions.

Markets carried their strong momentum from the second quarter into the third quarter, with the S&P 500, Nasdaq, and Russell 2000 each hitting new highs. Investor sentiment remained optimistic despite soft labor market data and mixed economic signals, and stocks traded higher due to strong corporate earnings, the Federal Reserve’s resumption of rate cuts, and easing trade tensions.

The past two years have been strong for investors, with the S&P 500 posting back-to-back gains of over 20 percent. At the start of this year, the S&P 500’s previous all-time high was set in January 2022 (4,796 on the first trading day of 2022). It took over two years to reclaim the prior high, but once the index broke through in late January 2024, it set more than 50 new highs this year.