Wall Street hit: worst quarter in years
US stocks end Q1 2025 on a down note. The S&P 500 and Nasdaq Composite posted their weakest quarterly results since 2022, shaken by the growing uncertainty surrounding Donald Trump's new economic strategy. The former president's return to the White House and his drastic moves on the foreign economic front have noticeably cooled investors' ardor.
March in the red: the market is reeling
March was a particularly painful month for Wall Street. Both indices suffered their biggest monthly losses since December 2022. The reason was a sharp turn in trade policy - a new wave of tariffs from the Trump administration provoked concerns about the possible escalation of global trade tensions. Investors fear that such steps could not only slow down global economic growth, but also trigger a surge in inflation.
Falling on all fronts: the numbers speak for themselves
In the first three months of the year, the S&P 500 fell by 4.6%, the Nasdaq - by 10.5%. Even the more stable Dow Jones succumbed to the pressure, losing 1.3%. Amid expectations and fears, the market demonstrated high volatility, with previously untouchable tech giants at the center of the sell-off.
Are the Greats Doomed? Tech Giants Losing Heights
The symbols of the past "bullish rally" - the so-called "magnificent seven" of tech companies - suddenly found themselves under attack. Investors were dumping stocks that had previously served as growth engines. Tesla shares fell by almost 36% in the quarter, and Nvidia lost about 20%.
Tech on pause, energy on the rise
The losses were especially noticeable in the IT and consumer goods sectors, both of which showed double-digit percentage declines. And yet, despite the overall negative backdrop, not everything looked gloomy. Most of the 11 sectors of the S&P 500 managed to end the quarter in the green. Energy was the leader in growth, adding an impressive 9.3%.
A brief lull before the storm
Investors got a respite at the beginning of the week: the stock market regained some ground despite the ongoing tensions around tariff policy. In anticipation of the clarifications that Donald Trump promised to give on Wednesday, traders temporarily put aside concerns about the potential escalation of global economic conflicts.
Tariffs for everyone: the president does not hold back his ambitions
A loud statement was made on Sunday - Trump confirmed that he is ready to expand tariff barriers to a global scale. In addition to the already imposed duties on metal, cars and Chinese goods, new, even larger-scale measures are on the way. Such aggressive rhetoric increases anxiety in markets, where possible retaliatory measures from US trading partners are already being discussed.
The rise is in question: indices react in different directions
Despite the general nervousness, the S&P 500 index added 30.91 points on Monday, strengthening by 0.55% to 5611.85. The Dow Jones also ended the day in the green — an increase of 417.86 points (or 1%) raised the index to a historical mark of 42,001.76. But the Nasdaq showed the opposite dynamics — a decrease of 23.70 points (-0.14%) threw it back to 17,299.29.
Finance in focus: the sector demonstrates resilience
The impetus for the S&P 500 growth came from the financial sector. Shares of Discover Financial Services jumped by an impressive 7.5%, and Capital One shares added 3.3% amid news that their merger may be approved by regulators. Investors have once again shown interest in the banking segment, seeing it as a place for speculative growth amid consolidation.
Safe Haven: Consumer Goods Leads the Way
Amid uncertainty, the consumer goods sector, a traditional "safe haven" for investors, has emerged as the frontrunner for growth. The index rose 1.6%, indicating increased demand for stable companies with predictable profits. Energy also closed higher, supported by soaring oil prices, adding confidence in the sector's short-term resilience.
Fear Not Going Away: VIX Index Sounds Alarm
However, underlying tensions remain. The CBOE Volatility Index, known as Wall Street's fear gauge, rose sharply to 22.28 points, the highest in the last two weeks. This signals that market participants are still bracing for possible sharp movements and do not rule out further shocks.
Goldman Sachs Changes Forecasts: Anxiety Is Growing
Trade uncertainty associated with new US tariffs has forced analysts at Goldman Sachs to revise their economic expectations. The bank now estimates the probability of a recession in the United States at 35%, a significant increase from the previous 20%. In addition, the S&P 500 index target for the end of the year was lowered to 5,700 points. Investors also took note of the updated forecast: analysts expect the Federal Reserve to resort to further reduction of key interest rates.
Economic Week: The Numbers That Will Decide Everything
The market froze in anticipation of a series of macroeconomic publications. The key ones will be the latest ISM business activity indices, as well as the non-farm payrolls report, the most important indicator of the state of the US labor market. In addition, the focus is on the speeches of Fed officials, including Jerome Powell himself, whose rhetoric could set the tone for financial markets in the coming weeks.
Pharma under pressure: personnel shocks hit stocks
The healthcare sector came under pressure after the unexpected resignation of one of the leading FDA officials who oversaw the development of vaccines. Investors reacted with lightning speed: Moderna shares fell by almost 9%. Gene therapy companies also felt the blow - Taysha Gene Therapies lost 28% of its value, and Solid Biosciences - more than 14%.
Deals and consequences: one loses, the other wins
In the corporate sector, there is big news: mortgage giant Rocket Companies agreed to take over Mr. Cooper Group in a $9.4 billion deal. Investors reacted in different directions, with Rocket shares plunging 7.4%, while Mr. Cooper soared 14.5%. Mergers and acquisitions continue to reshuffle the market, creating unexpected winners and losers.
Europe Recovers, But With a Caution
Meanwhile, European markets are cautiously optimistic. After falling to two-month lows, most European bourses ended in the green on Tuesday. Investors, however, remain wary, with the focus on upcoming US tariffs that could hit European companies as well. Defensive healthcare stocks were the biggest winners, with the sector's index up 1%, indicating continued demand for safe havens.
One Giant, One Momentum
Pharmaceutical heavyweight Novo Nordisk managed to inject some optimism into European trading. The Danish stock jumped 2.1%, becoming the main driver of growth after a prolonged nine-day slide that weighed on investor sentiment.
STOXX 600 bounces back: cautious optimism after panic
The pan-European STOXX 600 index gained 0.6% by Tuesday morning GMT, recovering from a massive 1.5% decline the previous day. Market participants have started to return to risk assets, although concerns about trade tensions between the US and the rest of the world have not disappeared.
Decline, but not collapse
Despite the general anxiety, the benchmark STOXX index remained positive for the quarter. After a 5% correction from the record highs of March, investors have turned their attention back to Europe. The reason is aggressive measures to support the economy from Germany, as well as signs of a slowdown in the US, which make European assets more attractive in the short term.
Goldman Corrects Course: Europe Under Pressure
Investment giant Goldman Sachs has also weighed in. The bank has revised down its STOXX 600 forecast, cutting its 12-month target to 570 points (from 580 previously), citing potential headwinds from US tariffs. The forecast reflects a cautious view of the sustainability of the European recovery amid global instability.
Light at the End of the Tunnel: Factories Are Starting to Revive
Amid subdued expectations, a glimmer of positive data has suddenly appeared. The latest survey of activity in the eurozone industrial sector showed long-awaited signs of recovery. After months of stagnation, manufacturing has begun to show an upturn, albeit at an early stage.
Inflation in sight: Key to ECB action
Investors are holding their breath ahead of the latest eurozone inflation data, due out at 09:00 GMT. The numbers are heightened by the fact that Germany has already surprised analysts with weaker-than-expected price growth in March, raising expectations that the European Central Bank may ease monetary policy further.
ECB listening: Lagarde and Lane to give cues
Later in the day, markets are set to hear from two key figures in European monetary policy, ECB President Christine Lagarde and ECB board member Philip Lane. Their comments could shed light on the regulator's view of the trajectory of inflation and its next steps on interest rates.
Biotech breakthrough from Denmark
Bavarian Nordic shares have risen almost 1.8% after a new form of their vaccine against mpox (formerly monkeypox) and smallpox was approved by the US regulator. The lyophilized (freeze-dried) version of the drug is more stable and easier to store, especially in conditions of limited access to cold chains. For the Danish company, this is an important step in its global expansion and strengthening its position in the US pharmaceutical market.
Italian reform: what is changing in the M&A market
A potential change in corporate rules is being discussed in Italy that could significantly affect the M&A market. The authorities are considering raising the minimum shareholding threshold, upon reaching which investors are required to make an offer to buy out the remaining shares. Currently, this threshold is relatively low, and any adjustments could change the landscape of influence in large public companies.
Telecom Italia — at the crossroads of interests
One of the most striking examples of the reform's potential impact could be Telecom Italia (TIM). The state-controlled financial giant Poste Italiane is preparing to become the operator's largest shareholder, increasing its stake to 24.8%. Under current rules, such participation would automatically trigger a mandatory buyout offer from other investors. But if the threshold is raised, Poste Italiane will be able to significantly increase its influence without formally committing to consolidation.
