Commentary

Global equity markets have staged an impressive rebound since bottoming on April 8. At that time, the Nasdaq 100 had fallen into a bear market, declining more than 20% from its high in mid-February. By mid-May, the Nasdaq 100 had erased its year-to-date decline and even turned positive. The S&P 500 likewise rallied from the April lows, led by easing fears of a worst-case trade war outcome. In fact, U.S. stocks rallied over 3% on some days when news broke that the U.S. and China were dialing back their tariff war.

Equity markets were relatively unchanged this past week, with the S&P 500 finishing flat after giving back early gains spurred by news that the U.S. would temporarily exempt certain tech products from new China tariffs.

Given the recent volatility, we wanted to discuss the current environment and provide perspective on past declines. We believe several factors have contributed to the current market selloff.

Both stocks and bonds produced positive returns in January; however, there was a change in market leadership as the rally broadened.

Both stocks and bonds produced positive returns in January; however, there was a change in market leadership as the rally broadened.

Both stocks and bonds produced positive returns in January; however, there was a change in market leadership as the rally broadened.

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.

Last week the financial markets remained strong, signaling a continuation of bullish sentiment among investors. The Dow Jones Industrial Average closed at a record high, gaining nearly 2% for the week. The gains were driven by strong performance across multiple sectors including technology, industrials, and healthcare.