Welcome to the monthly market update from Midland Wealth Management. I’m Chris Zabel, Portfolio Manager. Today, I wanted to take a few moments to update you on the state of markets in March.

Market Overview

U.S. stocks faced a volatile month due to concerns over tariffs, inflation, and the economy. The benchmark S&P 500 index dropped 5.6% for the month and is now negative for the year. The tech-heavy NASDAQ experienced a steeper decline, down 7.6% for the month.

In international markets, the MSCI EAFE index fell 0.3% in March but is still up 7.0% year-to-date. This is the first time since the late 1980s that we have seen such large outperformance in international equity markets compared to domestic equities – highlighting the benefits of international diversification.

GDP

The final estimate of fourth quarter GDP ticked up from 2.3 to 2.4%. The Federal Reserve Bank of Atlanta’s GDP forecasting model, however, is projecting a slowdown in growth for the first quarter. While not official, this revision is largely due to the increase in the magnitude of imports as manufacturers and suppliers attempt to get ahead of the price impacts of tariffs.

Jobs Market

The March jobs report is expected to show a gain of 140,000 jobs, down marginally from 151,000 in February. The unemployment rate is expected to remain at 4.1%.*

Federal Reserve & Bond Market

The Federal Open Market Committee (FOMC) voted to hold the Fed Funds target rate at a range of 4.25 to 4.50%.

Importantly, the Committee announced that beginning in April, the Committee will slow the pace of runoff in its securities portfolio by reducing the monthly redemption cap on U.S. Treasuries from $25 billion to $5 billion. The FOMC remains data dependent and committed to its dual mandate of full employment and price stability.

Regarding the latter, the Personal Consumption Expenditures index deflator remained at 2.5% year-over-year in February, while the Core measure, which strips out the volatile energy and food sectors, increased marginally to 2.8%. Both measures remain above the Fed’s stated 2% objective.

The Fed Funds futures market is pricing in three 0.25% cuts for the remainder of this year. The benchmark 10-year Treasury rate ended the month at 4.2% after beginning the year at 4.55%, reflecting increasing economic uncertainty due to trade policy.

Outlook

Looking ahead, continued uncertainty is expected to contribute to market volatility. The Portfolio Management team will be closely monitoring tariff policy and evaluating its impact on trade, prices, and economic growth for the remainder of the year.

Thanks for joining me for this month’s market update.

* Source: Bloomberg LP