Tyler’s Take
“The market is throwing a fit – anticipating a Trump trade war and the MAG 7 didn’t come to the rescue.
If you’ve got extra cash sitting on the sidelines, now might be a smart time to start dollar-cost averaging back into the market. Spread your buys over the next year to smooth out the bumps of this down turn—but it’s a classic move if it fits your financial goals and risk tolerance. ”
US Stock Market
The U.S. stock market faced a bruising first quarter in 2025 (January 1 to March 31), grappling with steep declines across all major indices amid a storm of macroeconomic pressures and seismic policy shifts under the Trump administration. The S&P 500 logged its worst quarterly performance since 2022, tumbling 4.6% to close around 5,611.85, erasing gains from late 2024. The Nasdaq Composite bore an even harsher blow, plunging 10.4% to 17,299.29, driven by a dramatic unwind in mega-cap technology stocks. Meanwhile, the Dow Jones Industrial Average held up better, shedding just 1.3% to end near 42,001.76, buoyed by resilience in non-tech sectors. This marked a pivotal shift from the growth-driven exuberance of prior years to a more defensive, value-oriented market stance.
Mega-Cap Tech Takes a Hit – The so-called “Magnificent Seven” (MAG 7)—mega-cap tech stocks that had been the darlings of Wall Street—suffered a collective rout, signaling a potential end to their dominance. Tesla cratered 36%, Nvidia slid 20%, Apple dipped 13%, Microsoft fell 13%, Amazon dropped 15%, and Alphabet retreated 20%. This tech sell-off pushed the Nasdaq into correction territory by early March, a stark reversal from its 2023-2024 highs.
AI Theme: A Step Back from the Spotlight – The artificial intelligence (AI) narrative, a key driver of tech stock gains in recent years, hit a speed bump. China’s DeepSeek rattled investors by unveiling an AI model rivaling U.S. market leaders like OpenAI, but at a fraction of the cost. Fears mounted over eroding U.S. dominance in AI innovation. DeepSeek’s breakthrough, reportedly achieved with leaner resources, sparked a reassessment of the massive capital investments poured into American AI firms. Investors began questioning the outsized returns they’d banked on, with competitive alternatives that could compress profit margins across the sector. This shift contributed to the tech wreck, amplifying losses in AI-heavy names like Nvidia and Microsoft.
Trade Tariffs: Escalation and Uncertainty – The Trump administration’s aggressive trade agenda dominated headlines and market dynamics in Q1. Starting late January, the U.S. slapped 25% tariffs on imports from Canada and Mexico and doubled tariffs on Chinese goods, igniting a broader trade war. Retaliatory measures swiftly followed: Canada imposed tariffs on U.S. energy exports, the EU targeted American tech and agricultural products, and China hit back with restrictions on rare earth exports. As Q1 closed, investors braced for April 2, dubbed “Liberation Day” by Trump in campaign rhetoric, when a broader swathe of tariffs was slated for announcement.