Like you, I’ve seen some eye-catching headlines lately — Wall Street has certainly had its fair share of excitement! Here are some quick thoughts followed by the Monthly Market Insights Newsletter.
First, we heard that “Chinese Start-Up DeepSeek Threatens American Artificial Intelligence Dominance,” which sent tech stocks on a rollercoaster ride. Then came “Tariffs Could Impact Inflation,” shaking up U.S. stock prices and rattling financial markets worldwide. To put things in perspective, I’ve included a chart showing how markets have handled major geopolitical events over the past 30 years. (The original version goes back to 1900—starting with the San Francisco Earthquake and Fire in 1906!)
The takeaway? Big news events constantly test markets, but they also have a long history of resilience. So far, 2025 has thrown us a few surprises, and chances are, we’ll see more “shock” headlines before the year is out.
But here’s a simple way to think about your portfolio:
📊 Portfolio = Goals + (time horizon + risk tolerance)
Market swings are just part of the equation!
One of my favorite Warren Buffett quotes sums it up well:
“Be fearful when others are greedy and greedy when others are fearful.”
Right now, that mindset might be coming into play. While stock prices hit all-time highs in early February, individual investors were surprisingly bearish. The AAII Sentiment Survey dropped to 28.4 on February 12, the lowest reading since November 2023.
And who can blame them? Tariffs, inflation, interest rates, and global tensions create an overwhelming mix of concerns. But history shows that individual investors tend to get caught up in emotions, overconfidence, regret, and trend-chasing, while Wall Street stays focused on the bigger picture.
So, let’s take a deep breath, tune out the noise, and stay focused on what matters: your long-term goals!
February 2025 Market Recap: A Wild Ride with Some Bright Spots
Stocks had a bumpy February as inflation concerns, trade policy shifts, and mixed economic data kept investors on edge.
Market Moves
Tariff Talk Shakes Things Up: News of new tariffs on Mexico, Canada, and China sent stocks lower early in the month, but markets rebounded after delays were announced.
Fed Holds Its Ground: Fed Chair Jerome Powell reassured lawmakers that rate cuts aren’t an urgent priority, keeping investors guessing about future policy shifts.
S&P 500 Hits Another High: Despite the volatility, markets rallied after Presidents’ Day, with the S&P 500 notching its third record close of the year.
Earnings & Growth Concerns: A major retailer’s weak outlook fueled fears of an economic slowdown, while Atlanta Fed President Raphael Bostic hinted at early signs of a cooling labor market.
Sector Winners & Losers: Real estate, consumer staples, and utilities saw gains, while consumer discretionary and tech stocks took a hit.
Big Picture: What’s Next?
Looking ahead to March, investors are watching European markets, which have been outperforming the U.S. thanks to stronger earnings projections.
European stocks are on a tear, with Spain, Italy, and Germany leading the way.
China’s Hang Seng Index soared 13.75%, but Japan’s Nikkei took a hit.
Key Economic Indicators
GDP Growth: The economy expanded 2.3% in Q4, slightly slowing from 2023’s pace.
Job Market: Employers added 143,000 jobs, but wage growth accelerated.
Inflation Watch: Consumer prices rose 0.5% in January, higher than expected.
Housing Market: Housing starts and existing home sales dropped, pressured by higher mortgage rates.
The Fed’s Next Move: The next FOMC meeting in March will give investors more clarity on interest rates.
Bottom Line
February reminded investors that markets are always evolving, but long-term strategies remain key. While headlines may rattle stocks, resilience and patience tend to pay off. Buckle up, 2025 still has plenty of surprises ahead!