As we bid farewell to 2025, we reflect on a year of contrasts, turbulence and cross currents. It was a year of extremes, even by today’s standards … April’s sweeping tariff announcements sent markets tumbling (to the tune of $5 trillion in two days for the S&P), only to recover to previous levels by late June (AND close out the year with strong gains).
It was another strong quarter for U.S. equities, with the major indices hitting record highs. In spite of mixed economic data, a softening job market and a looming government shutdown, the DOW, NASDAQ, S&P 500 and Russell 2000 ended the quarter up 5.2%, 11.2%, 7.8% and 12% respectively.
Kicking off with President Trump’s April 2nd “Liberation Day” tariff announcement, Q2 began with equity markets plummeting, as fears of spiking inflation and the specter of a potential trade war sent stocks free falling by more than 19% from their February high.
Washington has a new administration since our last Executive Summary, along with a plethora of rapid and economically significant executive orders and policy changes – most notably the pending rollout of tariffs and the overhaul of government agencies for enhanced efficiency and federal spending cuts.
The U.S. stock market powered higher in 2024, continuing a pretty remarkable bull run. Q4 started out slow before rallying with a post-election bang following a Trump win, and while markets hit a bit of a speed bump when the Fed indicated reduced expectations for rate cuts, the quarter ended in positive territory, wrapping up another year for the record books.
For a while there, it looked like the 2024 market rally might be in trouble during the third quarter, with mid-quarter job reports reflecting a cooling labor market and stocks taking a hit. But in September, the Federal Reserve cut interest rates by a larger-than expected 50 bps, and at the end of the roller coaster ride, stocks finished up.