Fortis Wealth Management

(888) 336-7847 (3FORTIS)

www.investfortis.com

March 2025
Market Update
(all values as of 04.30.2025)

Stock Indices:

Dow Jones 40,669
S&P 500 5,569
Nasdaq 17,446

Bond Sector Yields:

2 Yr Treasury 3.60%
10 Yr Treasury 4.17%
10 Yr Municipal 3.36%
High Yield 7.69%

YTD Market Returns:

Dow Jones -4.41%
S&P 500 -5.31%
Nasdaq -9.65%
MSCI-EAFE 12.00%
MSCI-Europe 15.70%
MSCI-Pacific 5.80%
MSCI-Emg Mkt 4.40%
 
US Agg Bond 3.18%
US Corp Bond 2.27%
US Gov’t Bond 3.13%

Commodity Prices:

Gold 3,298
Silver 32.78
Oil (WTI) 58.22

Currencies:

Dollar / Euro 1.13
Dollar / Pound 1.34
Yen / Dollar 142.35
Canadian /Dollar 0.72

Macro Overview

The administration confirmed that the U.S. would impose a 25% tariff on goods and services imported from Canada and Mexico effective early April, including an additional 10% tariff on Chinese imports. The effective date of the new tariffs was announced by the White House as a temporary reprieve following pleas from industry leaders. The implementation of the newly applied tariffs has been extended to April 2nd. Inflation projections have raised renewed concerns as the prospect of the tariffs weigh on the outlook for consumer expenditures.

Some economists project that higher prices paid by consumers due to tariffs might actually become deflationary since consumers may pull back spending on higher-priced products. Even a slight pullback would be consequential for the U.S. economy since nearly 70% of Gross Domestic Product (GDP) comprises consumer spending. Lower spending could lead to an economic slowdown, eventually bringing down inflationary pressures and interest rates.

Treasury Secretary Scott Bessent said that the market selloff would be temporary and that Chinese manufacturers would absorb the newly-imposed tariffs. The Treasury Secretary also noted that a transition period regarding trade policy is underway with Canada and Mexico. There are mixed opinions regarding the consequences of the tariffs, differing within and outside the administration.

Applications for unemployment benefits rose amid an increase in company layoffs across the country. Initial claims increased by 22,000 to 242,000 in late February, the highest level since October 2024. The pickup in new applications coincides with a number of mass terminations and layoffs at numerous companies in various industries.

Data released by the National Association of Realtors showed that pending sales of existing U.S. homes slumped to a record low in January, as severe winter weather slowed transaction activity. Consumers also balked at high prices and elevated mortgage rates ahead of the spring selling season. Home prices continue to present an affordability obstacle preventing home buyers from committing to purchase. National home prices rose 3.9% in December from a year earlier, up from the 3.7% annual gain seen a month earlier, according to data from S&P CoreLogic Case-Shiller. The median sale price of a previously owned home in the U.S. was $396,900 last month, according to NAR data, up 49% from five years earlier.

Those earning $250,000 and above now account for nearly half of all consumer spending. Rising home values and elevated stock portfolios over the past few years have helped propel spending among higher-income earners. Economists attribute this to what is known as the wealth effect, essentially the confidence among consumers to spend more as asset values rise.

Sources: U.S. Treasury, Dept.. of Commerce, NAR, S&P, Fed, BEA

 

 
S&P 500 has risen 33% over 3 years, adding considerable wealth to households

Equities Response To Proposed Tariffs – Stock Market Overview

Equity indices broke from an upward trend as the threat of tariffs weighed on U.S. companies hesitant to pass along the higher costs. Margins contract as costs are absorbed by companies, diluting future earnings for corporations. Faltering consumer confidence was evident in February as the Consumer Discretionary sector of the S&P 500 Index saw a 7% decrease for the month. Technology saw a 2.26% drop in February, resulting from an anticipated decrease in corporate capital investment and lessened consumer demand.

Foreign ownership of U.S. equities is currently $17.6 trillion, reflecting continued global confidence in the transparency of the nation’s financial markets. Foreign entities, both governments and institutions, flock to the U.S. equity and bond markets for stability and liquidity. (Sources: Department of the Treasury, Federal Reserve Bank of New York)

Rates Steady As Inflation & Tariffs Alter Sentiment – Fixed Income Update

The U.S. Treasury is considering elongating federal debt, meaning that it would consider extending maturities of bonds rather than issuing short-term maturities to fund current government expenditures. Treasury yields fell moderately across the yield curve with the 2-year Treasury yielding 3.99% at the end of February and the 10-year Treasury closing the month at 4.24%. Short-term and long-term Treasury yields have become flatter, meaning that yields across the maturity curve have become more similar across all maturities. Analysts believe that markets are dictating the direction of rates more so than the Federal Reserve, as Treasury initiatives and the threat of heightened inflation challenge Fed plans to continue cutting rates. (Sources: Treasury Dept., Federal Reserve)

Household Asset Valuations Increase To Record Levels – Consumer Wealth

The value of household assets in the United States increased in 2024 to an all time high. The Federal Reserve tracks data that it gathers on assets held by households across the country. Economists believe that as household assets rise in value, so does the propensity for consumers to spend. The so-called wealth effect encourages spending and instills confidence in consumers, as expenditures increase with underlying asset values rising.

Increasing real estate values and elevated stock prices have contributed substantial wealth to U.S. households over the past few years. According to data from the National Association of Realtors, home values across the nation are up 49% on average from five years earlier. The S&P 500 Index has risen about 30% over the past 3 years, adding considerable wealth to households. Appreciated assets are being leveraged as homeowners borrow against the equity in their homes and stock portfolio accounts. (Sources: Fed, NAR)

 
phones, computers, & electronic components from China will have a 20% tariff

Where Tariffs Could Hit Hardest – Trade Policy

Smaller companies are likely to see a negative impact from new tariffs. The reliance on imported products by small companies throughout various industries has risen over the past few years. It is more difficult for smaller companies to pass along tariff costs to consumers, because of distribution channels and capital constraints, and they are forced to absorb additional costs which affects profitability. The United States continues to be one of the world’s largest importers, with a diverse range of products coming from countries including China, Mexico, Canada, Japan, and Germany.

Based on the newly imposed tariffs as of March 2025, several product categories are expected to be significantly affected:

Automobiles and auto parts: The 25% tariff on imports from Canada and Mexico is likely to impact the automotive industry substantially, including the major auto manufacturers and smaller suppliers.

Fresh produce: Fruits and vegetables imported from Mexico and Canada will face increased costs.

Electronics: Devices such as phones, computers, and other electronic components from China will be subject to a 20% tariff.

Lumber: Canadian lumber imports will be affected by the 25% tariff, affecting the housing market and home builders.

Energy products: While Canadian energy resources face a lower 10% tariff, they are still impacted.

Agricultural products: U.S. exports of chicken, wheat, corn, cotton, soybeans, and pork to China will face retaliatory tariffs.

Actual tariffs may differ from what the White House has announced as of the beginning of March. Implementation regarding targeted countries and products may change as the administration negotiates with the country’s trade partners. (Sources: U.S. Bureau of Economic Analysis, Imports of Goods and Services, provided by the Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org)

 
medical related costs rose 121% vs CPI increasing 86% over 24 years

Medical Expenses Increasing More Than Inflation – Healthcare Industry Update

Medical care expenses have consistently increased more than the overall expenses of all goods and services in the U.S. Many individuals and families have seen healthcare costs rise faster than their wages over the past 20 years, making healthcare costs a larger component of household expenditures. From January 2000 to June 2024, medical related costs rose 121%, while the costs of all other goods and services increased 86%.

Demographics have contributed and will continue to contribute to the costs of medical care, as a growing portion of the U.S. population ages, demanding more healthcare services. Extended life expectancy has also increased the costs for more specialized medical care in advanced age.

Medicare benefits provide for millions of Americans, yet Medicare is struggling to keep up with rising healthcare costs as the program’s expenses have increased substantially since its inception due to population growth, inflation, and demand for new technologies. This has led to significant financial challenges for the Medicare program. The Medicare Part A Trust Fund is expected to be depleted by 2031, according to the 2023 Medicare Boards of Trustees report. Actions by Congress and an/or an increase in tax revenue could potentially mitigate the depletion. (Sources: BEA, Federal Reserve)

Top 10% of Earners Account for Half of All Spending – Demographics Overview

Consumers in the top 10%, earning an average of $250,000 or greater per year, account for roughly 50% of all consumer spending nationwide. These consumers are spending on everything from vacations to furniture to automobiles. Rising home values and elevated stock portfolios have helped propel spending among higher income earners. Economists attribute this to what is known as the wealth effect, essentially the confidence among consumers to spend more as asset values rise. Such a disparity is a concern among economists, since any sudden retreat in spending by the top 10% of earners could lead to a retraction of consumer expenditures and economic expansion. (Sources: Federal Reserve, Dept. of Labor)

 

Market Returns: All data is indicative of total return which includes capital gain/loss and reinvested dividends for noted period. Index data sources; MSCI, DJ-UBSCI, WTI, IDC, S&P. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.