Q1 2025 Market Update

In the first quarter of 2025, global markets experienced heightened volatility amid escalating U.S. trade tensions, uncertainty around tariff policy, and a dampening in US earnings growth expectations.  This was driven by sweeping policy changes that were perhaps quicker and more comprehensive than markets expected.  With increased inflation expectations, the S & P 500 sold off 4.3% and had a 10% drawdown from its peak in February.  The volatility and uncertainty also drove investors to safer assets (i.e. a flight to quality) such as US Treasuries and gold.  Performance in US equities continues to broaden as the equal-weighted S & P 500 outperformed the S & P 500 for the 2nd time in three quarters at -.61%.  Against this backdrop, EAFE, emerging markets, and US Investment Grade outperformed US equities.  Further US Large Cap Value continued to outperform US Large Cap Growth as seen below: 

Moving forward, the US economy remains on strong footing as evidenced by the March unemployment rate of 4.2% which was only a slight uptick from February’s 4.1%.  Furthermore, the labor markets showed resilience with adding 228,000 nonfarm jobs which was higher than the prior 12 month average  of 158,000.  However not all data is positive as growth expectations were revised  slightly downward due continued uncertainty surround policy changes and tariffs.  US equity prices remain elevated and although credit spreads remain relatively tight, US IG spreads have widened thus far in 2025.

This implies that the pathway ahead remains uncertain with continued volatility.  Geneva encourages its participants to stay invested, balanced and well-diversified. This year is proving to be a market environment in which Geneva’s custom built Target Date Funds will help navigate the uncertainty ahead with their prudent asset allocation across global asset classes.