Market Update: Trends & Trade Impact

This week, the U.S. stock market has experienced notable volatility, primarily influenced by escalating trade tensions and their potential economic repercussions. As of March 5, 2025, the SPDR S&P 500 ETF Trust (SPY) is trading at $575.75, reflecting a slight decrease of 0.19% from the previous close. The Dow Jones Industrial Average ETF (DIA) shows a modest uptick of 0.10%, trading at $425.98. Conversely, the Invesco QQQ Trust (QQQ), representing major tech stocks, has declined by 0.35% to $493.80.

The technology sector has been particularly sensitive to these developments. Apple Inc. (AAPL) has seen a decline of 2.11%, now trading at $230.95. Tesla Inc. (TSLA) has also faced downward pressure, with its stock decreasing by 0.62% to $270.36. In contrast, Microsoft Corporation (MSFT) has managed a modest gain of 0.76%, reaching $391.58, while Amazon.com Inc. (AMZN) is up by 0.67% at $205.16.

As a response to our concerns regarding the tech sector, we have sold numerous positions within your portfolios and are reviewing new areas of investment. 

The primary catalyst for this market volatility is the recent announcement by President Trump to impose a 25% tariff on imports from Canada and Mexico, alongside additional tariffs on Chinese goods. These measures have raised concerns about a potential trade war and its implications for the global economy. Economists warn that such tariffs could lead to stagflation—a scenario characterized by stagnant economic growth coupled with rising inflation. This concern is underscored by recent data indicating a slowdown in consumer spending and a dip in consumer confidence.

The Federal Reserve faces a challenging environment, as it must balance the need to control inflation with the imperative to support economic growth. The prospect of stagflation complicates monetary policy decisions, as traditional tools may be less effective in such a scenario. Investors are advised to monitor upcoming Federal Reserve communications for insights into potential policy adjustments.

Looking ahead, the market is likely to remain sensitive to developments in trade negotiations and economic indicators. Companies heavily reliant on international supply chains may experience increased volatility, making diversification and a focus on fundamentally strong companies prudent strategies for investors.

As always, we welcome your questions and are here to support you. At the heart of everything we do is our commitment to "Wealth Management for Life"—providing enduring guidance for you and your family’s financial success.