Monthly Market Recap

Growth Scare Hits Risk Assets

High valuations come with high expectations. U.S. equity markets step back on growth concerns.

KEY OBSERVATIONS

Growth Scare Hits Risk Assets – Weaker economic data, a patient Fed and shifting policy dynamics fueled slowdown fears triggering a broad selloff of U.S. equities, with defensive sectors outperforming.
Growth Puts Spotlight on Valuations – High-valuation stocks fell more than peers, while value and defensive sectors led. Consumer staples outperformed consumer discretionary by 11%, while Treasuries rallied amid shifting markets sentiment.
International Extends its Lead – The MSCI EAFE Index, a proxy for non-U.S. developed equity exposure, took another step forward and added to its 2025 lead over the S&P 500, led by EU financial and defense spending along with a cooling of U.S. high valuation stocks.

January marks political and market shifts in leadership

KEY OBSERVATIONS

Markets Adapt to Policy Shifts – President Trump’s executive orders kept investors on edge, but his position on tariffs provided a tailwind for international markets.
NVIDIA’s Wake-Up Call – A 17% drop in NVIDIA shares, triggered by AI competition from China, highlights the risks of market concentration and stocks priced for perfection.
The Fed Holds Steady – With solid GDP growth and low unemployment, the Fed left rates unchanged, signaling caution rather than a rush to ease policy.
Tariffs are an Inflation Wild Card – While tariffs could push prices higher, history also shows they are just one piece of a larger economic puzzle. For more on this matter, please view our latest post.