Two of the three major US stock indices concluded their worst quarter in more than two years. The third barely avoided the same fate.
The S&P 500 fell more than 4.5% in the first quarter of 2025 as of Monday’s end, with the high-tech NASDAQ plummeted by 10.4%. The Dow Jones industrial average fell 1.3%, marking its first consecutive monthly loss since October 2023.
The decline in all three indexes comes before President Donald Trump is set to announce a new slate of broad tariffs, extending the ongoing trade policy disruption that investors have been speculating for months.
The Broad-based S&P 500 fell into the revised territory for a short time on Monday. That is, there is a 10% slide from the last high. The index regained some ground at the end of the day, but it wasn’t enough to dodge the worst monthly percentage drop since December 2022.
The Index’s first quarter stumble ended a five straight win quarter streak, but the Nasdaq wiped out more than half of last year’s profit over the past three months. Amazon, Apple, Microsoft, Alphabet, Nvidia, Tesla and Meta are known on Wall Street as “Magnificent 7” and have lost market value of over $2 trillion since the start of the year.
After Russia’s invasion of Ukraine, the US market stumbled in mid-2022, shocking the global economy as Western countries collided with Moscow and commodities such as oil and grain were shot at prices.
The first quarter of this year saw a different kind of geopolitical upheaval as investors struggled to digest a series of major US policy changes since their inauguration date. According to Dow Jones, the quarter marked the worst performance in the world since 1980 and a period of surges in many foreign stock markets.
The Euro Stoxx 600 index, which tracks businesses from 17 countries, rose 5% to start the year as the S&P 500 fell by about the same amount. In fact, according to FactSet data, the STOXX 600 has earned its highest quarter against the S&P since 2015. The UK’s FTSE 100 also rose by more than 5% over the same period. The MSCI China Index, a benchmark for 580 Chinese stocks, rose 16% in the first quarter.
The overseas markets have jumped out for a variety of reasons, but some are not related to the actions of the Trump administration. The European Union and the UK have responded to White House moves and have taken steps to hike military spending, increased stock in defense companies in both locations, and supported the electricity market overall. In China, strong performances more reflect regional factors, such as economic stimulation and enthusiasm for homemade AI startups.
But it’s not a rosy photo everywhere. Japan’s flagship stock index sank 10% in the first quarter in fears about the export economy that could be hurt by slowing manufacturing and Trump’s still-expanding tariff agenda.
The president is set to open another front in Wednesday’s trade war. This is the date he was called the “liberation date” of America, known as abuse of top trading partners, many of which have been long-standing allies. Trump has pledged so-called mutual tariffs aimed at levelling trade barriers between the US and many countries, selling more of their goods and services than they buy from the US.
However, as details of this policy program are still appearing in the air before it unfolds, business leaders and consumers have been tackling widespread uncertainty about the upcoming impact. Nearly 900 non-financial companies mentioned tariffs in their recent revenue calls, S&P Global Market Intelligence said.
“This is really ridiculous,” one manufacturing business enforcement official said in an anonymous Federal Reserve Bank investigation in Dallas, issued Monday. “I’ve been open for 50 years next year and have never seen such uncertainty in the market. It’s very difficult to plan and make a decision.”
But some analysts say things may not change in a few months.
“When tariffs are announced on April 2nd, negotiations can begin to ease them,” a researcher at investment bank UBS said in a note to clients on Monday. “Progress towards the budget adjustment bill can bring attention to the market-positive aspects of Trump’s agenda.”