2025 has not been a good year for the stock market as inflation proves to be far more sticky than what it appeared to be 6 months ago. What’s just as concerning is the recent stock market drop which doesn’t show any sign of slowing down as we prepare to enter the second quarter of the year.
On the first full trading day after Trump took office, the S&P 500 closed at 6,049, only 41 points off of its all time high, set in December 2024. Things have gone downhill since then with the S&P 500 closing the March 13 at 5,521, slightly more than 9% off of its high just shy of two months ago.
Tariffs, the threat of more tariffs, and general unpredictability has sent investors running for the exits as a possible recession looms in the not so distant future. In the same time frame, the price of gold has risen about 8%, while the benchmark 10 year U.S. Treasury note has dropped by about the same percentage. It appears as though the market is turning to the safe havens.
As of now, it’s hard to tell when the market might turn around. Some would say we are still far above the floor and a larger correction might be inevitable. A repeat of 2022 would wipe a significant amount of shareholder value from the markets. A 2008 recession would cut about 40% of stock values, something that could be ridden out long term (the market didn’t hit its 2007 highs again until 2013), but would be devastating for anyone looking to retire in the next few years.
A stop to the trade way would likely help the stock market considerably, but the damage might already be done for the year. Individual companies will probably have a hard time recovering due to the constant back-and-forth pressure the administration seems to be applying to the market.
The drop isn’t entirely without precedent – The first few weeks of GWB’s presidency saw a large drop in the S&P, same with Obama’s first two months. On the flip side, the first two months of Trump’s first term, and Biden’s term, saw significant gains.