Performance in 2025 has been a reminder of just how quickly — and unpredictably — markets can turn. Year-to-date performance, while solidly positive, has been anything but linear. U.S. equities began the year with modest gains, supported by optimism around pro-growth fiscal policies and easing inflation expectations. International developed stocks were a standout in the first six weeks, benefiting from a weaker dollar, attractive valuations, and supportive central bank policy.
By late February, sentiment had soured. Inflation fears reemerged, tech stocks corrected, and tariff concerns rattled markets. The S&P 500 fell sharply from its February 19 peak, with growth-oriented sectors — particularly tech — bearing the brunt. Small/mid cap stocks fared even worse, as their reliance on global supply chains and limited pricing power left them more vulnerable to trade disruptions. International developed stocks also pulled back, though to a lesser extent, as dollar weakness mitigated the downside for U.S.-based investors in foreign stocks.
Since the initial market shock in early April, however, markets have rebounded sharply, as earnings topped expectations and the economy muddled through, aided by increasing clarity around tariffs — all of which calmed fears of a more dire outcome. The S&P 500 has now surpassed its pre-correction peak, pushing through several new all-time highs. Small/mid cap and international stocks have also posted strong returns year-to-date.
The lesson is clear: market leadership changes, often abruptly, but volatility is two sided. Both sides were readily apparent since April. Investors that stayed the course were ultimately rewarded for staying the course.
Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.
Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.
Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.
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