AE Wealth Management: Market Minute 3/10/25 — Markets drop amid concerns around tariffs, consumer confidence, DOGE actions and a possible government shutdown
March hasn’t been good for markets. Since hitting an all-time high of 6,144 on Feb. 19, the S&P 500 slid to around the 5,600 mark on Monday.1 The Dow and NASDAQ have also experienced a significant sell-off in that timeframe.2,3
The initial reason for the downward slide was President Donald Trump following through on tariffs on Canada and Mexico after delaying them one month, ostensibly to give our neighbors time to staunch the flow of immigrants and drugs into the U.S.4 That theme hasn’t been consistent, however. One side is that tariffs are intended to slow drugs and migrants from coming into the country, which makes this a drug war, not a trade war. But Trump has also said the U.S. needs to stop getting ripped off by the rest of the world with regard to trade policy. The back-and-forth between “keeping America safe” and getting ripped off by the “globalists” is confusing to the markets — and markets hate confusion.
Markets are also concerned about consumers losing confidence.5 Much of this worry stems from the media whipping up fears of higher prices due to tariffs. In fairness, we don’t know how tariffs will impact prices, but the idea of paying more scares people.
The third item weighing on markets is the hubbub over the Department of Government Efficiency. Some of the DOGE discourse is legitimate (like laying off government workers and identifying waste and fraud), and some is grossly exaggerated (like threats about cutting Social Security and Medicare).
Then there’s the looming government shutdown. We were just in this position in December, and Congress decided to kick the can down the road instead of addressing the situation then. A shutdown could happen this week if Congress doesn’t take action to avert it.6
We could go on, but suffice it to say there is a ton of uncertainty and mounting concerns that all this will lead to a recession and even higher prices. Is this stagflation? It seems more like fandom, where people write stories about fictional characters as if they were real. It’s causing markets to head for the exits just after the best two years since 1998.7
Are we on the verge of a lost decade in the markets? In case you weren’t alive then or don’t remember, the S&P 500 was at 102.09 on Dec. 31, 1971, and 107.94 on Dec. 31, 1979.8 The current situation doesn’t feel like the ’70s. It is possible President Trump will realize the bad stock market is hurting him, and he will cut deals on tariffs and say he won to get the market to revert.
It’s also likely Congress will soon extend or make permanent the tax cuts that were passed back in 2017. There will be some modest improvement in government efficiency, interest rates and energy costs will decline, and (hopefully) markets will perform better.
We haven’t had any real or extended volatility over the last couple of years, so a downturn now isn’t completely unexpected. The important thing is to stay patient and ask yourself, “Do you think markets will still be lower in two or three years from now?” We think probably not.
1 Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed March 10, 2025.
2 Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed March 10, 2025.
3 Yahoo! Finance. “NASDAQ Composite (ˆIXIC).” https://finance.yahoo.com/quote/%5EIXIC/. Accessed March 10, 2025.
4 NBC News. March 10, 2025. “Live updates: China and Canada respond to Trump with new tariffs; Congress races toward shutdown deadline.” https://www.nbcnews.com/politics/politics-news/live-blog/live-updates-trump-government-shutdown-china-tariffs-labor-ukraine-rcna195479. Accessed March 10, 2025.
5 Bryan Mena. CNN. Feb. 25, 2025. “Consumer confidence registers biggest monthly decline since August 2021 as inflation fears take hold.” https://www.cnn.com/2025/02/25/economy/us-consumer-confidence-february/index.html. Accessed March 10, 2025.
6 Eric Lagatta. USA Today. March 10, 2025. “Government shutdown? Here’s when it could happen and which jobs would be paused.” https://www.usatoday.com/story/news/politics/2025/03/10/federal-government-shutdown-2025/82218475007/. Accessed March 10, 2025.
7 Josh Schafer. Yahoo! Finance. Jan. 2, 2025. “Here’s where Wall Street sees stocks heading after the best 2-year stretch since ’97-’98.” https://finance.yahoo.com/news/heres-where-wall-street-sees-stocks-heading-after-the-best-2-year-stretch-since-97-98-211510523.html. Accessed March 10, 2025.
8 FedPrimeRate.com. “Standard & Poor’s 500 Index History.” https://www.fedprimerate.com/s-and-p-500-history.htm. Accessed March 10, 2025.
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