Download the PDF

Market Update: Tariffied

The S&P 500 has fallen nearly 9% from its February highs, with the technology-heavy Nasdaq officially in correction terrority, while markets outside the U.S. continue to outperform.

March 2025, In the Loop

Key Insights
  • Trade tensions and economic uncertainty are fueling a broad equity sell-off, impacting investor sentiment and stock valuations.
  • Investors face a "transition period" as the administration signals willingness to endure short-term economic pain for long-term goals.
  • Market volatility may persist, but central banks could stabilize growth, creating opportunities in bonds and risk hedges.

Rising Uncertainty on “Transition Period”

  • What started with a decline in expensive tech stocks, including many of the Mag-7, has given way to a broad-based equity sell-off as the looming threat of extended trade wars and softer economic data has stoked fears of recession.
  • While it seemed investors had largely believed tariffs would be used as an initial tool to bring trading partners to the table and reach agreements to satisfy U.S. demands, recent comments by the administration signaling that they are willing to experience short-term economic pain in the pursuit of longer-term goals has rattled investors trying to adjust to this “transition period.”
  • Elevated stock market valuations, notably in the U.S. are being questioned, while at the same time, economic activity, both consumer and corporate are showing signs of softening, and is likely to lead to postponement on spending and hiring decisions.

Investor Implications

  • Taking President Trump at his word, we expect this uncertainty to persist over the near-term as his administration continues to take aggressive policy actions to achieve longer-term goals, which will likely weigh on growth and market sentiment, and possibly reignite inflation.
  • During Trump’s first term, trade negotiations with China lasted approximately 19 months, and while volatile, the markets largely responded positively to progress on negotiations. This time, however, seems different with the larger goals in mind.
  • While volatility may persist, we do believe the Fed and other central banks will likely step in to stabilize growth if the economy and labor markets deteriorate more quickly, with inflation possibly taking a backseat. As a result, in this risk-off environment, bonds could continue to offer support as yields may decline further, near-term.
  • Importantly, diversification away from previously narrow markets is providing support in the sell-off and we’re closely monitoring the markets as dislocation typically creates opportunities.

Tale of Two Terms: S&P 500 Price Change since Inauguration Day

As of 11 March 2025
Line chart of S&P 500 price change since Inauguration Day showing market volatility and correction in tech stocks.

Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results.
Data shown in USD. Source: Bloomberg Finance, LP. Please see Additional Disclosures page for relevant index data provider legal notices & disclaimers for this Standard & Poor’s sourcing information.

Feb 2025 From the Field Article

U.S. policy under Trump: What investors need to know

We explore the policy changes that could matter the most for markets and asset allocation.
By  Timothy C. Murray, CFA®

ADDITIONAL DISCLOSURES

The Magnificent 7 (”Mag 7”) is Apple, Alphabet, Amazon, Meta, Microsoft, NVIDIA, and Tesla.

S&P 500 Index measures the performance of the large-cap segment of the market. It is a market cap-weighted index of 500 stocks representing major industries.

The S&P 500 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). This product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.

Views expressed are as of 11 March 2025 unless otherwise noted.

The specific securities identified and described are for informational purposes only and do not represent recommendations.

IMPORTANT INFORMATION

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the mate-rial is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

Australia - Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. For Wholesale Clients only.

Canada - Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to non-individual Accredited Investors and non-individual Permitted Clients as defined under National Instrument 45-106 and National Instrument 31-103, respectively. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.

EEA - Unless indicated otherwise this material is issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.

New Zealand - Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. No Interests are offered to the public. Accordingly, the Interests may not, directly or indirectly, be offered, sold or delivered in New Zealand, nor may any offering document or advertisement in relation to any offer of the Interests be distributed in New Zealand, other than in circumstances where there is no contravention of the Financial Markets Conduct Act 2013.

Switzerland - Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.

UK - This material is issued and approved by T. Rowe Price International Ltd, Warwick Court, 5 Paternoster Square, London EC4M 7DX which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

USA - Issued in the USA by T. Rowe Price Associates, Inc., 1307 Point Street, Baltimore, MD, 21231, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.

© 2025 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.

202503-4311094