Market Commentary

Stocks Sink as Tariff Fears and Weak Economic Data Shake Investor Confidence

by Sequoia Financial Group

March 10, 2025

Stocks suffered their worst week of the year last week. The S&P 500 slid 3.1%, while the tech-heavy NASDAQ dropped 3.4%.[1] President Trump’s Monday announcement that 25% tariffs on imports from Canada and Mexico would go into effect weighed heavily on the stock market. The sell-off continued on Tuesday, with retaliatory threats from both Canada and Mexico. Ontario Prime Minister Ford went as far as threatening a 25% tariff on electricity powering homes in states that border Ontario. The S&P moved decidedly lower, ending Tuesday below where it closed on Election Day Tuesday in November.[2]

The market tentatively reversed course on Wednesday on hopes that market pressure would push President Trump to walk back the tariffs.[3] Those hopes were buoyed when tariffs on automakers whose cars comply with the USMCA were delayed by a month. And the hopes were somewhat fulfilled when tariffs on all products subject to the USMCA were also delayed. However, the back-and-forth took a toll on the financial markets and the one-month delay ultimately provided little comfort for what has become an increasingly nervous market.

Meanwhile, the Federal Reserve Bank of Atlanta published an updated estimate for Q1 GDP growth, showing negative 2.4%, a huge drop from an estimated growth rate of positive 3.9% in early February.[4] Two quarters of negative GDP growth is commonly considered a recession. With three weeks to go in the quarter, the economy could soon be halfway there, if the Fed’s GDPNow reading holds. Friday’s job report did little to calm recession fears, with 151,000 new jobs last month falling a bit short of the 160,000 expected. Friday also brought an updated economic forecast from Goldman Sachs. Goldman raised its recession probability to 20% and trimmed its GDP growth forecast for the year to 1.7% from 2.2%.[5]

Fortunately, diversification has remained a bright spot for investors. Unlike in 2022, when domestic stocks, foreign stocks, and bonds all suffered double-digit losses, foreign stocks and bonds have helped offset domestic stock losses in diversified portfolios in early 2025. The MSCI EAFA index has returned more than 10% since the first of the year, while the Bloomberg Aggregate Bond Index has climbed more than 2%. The S&P 500, meanwhile, has dipped 1.7%.

This week could bring more back-and-forth on tariffs. We’ll also get updates on job openings, consumer inflation (CPI), producer inflation (PPI), and consumer sentiment. We’ll be looking for better jobs number and tame inflation readings to help calm investor nerves.

[1] https://www.cnbc.com/2025/03/06/stock-market-today-live-updates.html

[2] https://www.cnbc.com/2025/03/03/stock-market-today-live-updates.html

[3] https://www.cnbc.com/2025/03/04/stock-market-today-live-updates.html

[4] https://www.atlantafed.org/cqer/research/gdpnow

[5] https://finance.yahoo.com/news/live/live-trump-threatens-tariffs-on-canadian-lumber-dairy-one-day-after-pausing-duties-on-canada-mexico-191201221.html

This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Diversification cannot assure profit or guarantee against loss. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Sequoia Financial Advisors, LLC makes no representations or warranties with respect to the accuracy, reliability, or utility of information obtained from third-parties. Certain assumptions may have been made by these sources in compiling such information, and changes to assumptions may have material impact on the information presented in these materials. Sequoia Financial Advisors, LLC does not provide tax or legal advice.