February 2025 Market Commentary & Outlook

February brought a flurry of activity and headlines for markets to digest, leading to a choppy month that saw US stocks rally to begin the month then decline as the month concluded. US stocks pulled back as political and economic uncertainty weighed on consumer and business confidence. Instability around government jobs and funding, combined with ever-changing tariffs between the US and their trading partners contributed to the uncertainty felt by investors.

Bonds, both domestically and abroad, as well as international stocks performed well over the month, rewarding diversified investors. Bonds surged as cooling labor market data and economic growth concerns pushed yields down and stoked optimism for future rate cuts from the Federal Reserve.

International stocks continued their hot start to the new year, rallying on strong economic data, optimism over easing interest rates, and hopes of a ceasefire in Ukraine. Strong earnings reports across Europe, fiscal stimulus in China, and a modest softening of the dollar contributed to international stocks’ third consecutive month of outperforming their US counterparts.

In March, the new administration imposed sweeping tariffs on many of the country’s largest trading partners. As the implementation and extent of the tariffs remain unclear and variable, markets have pulled back to begin the month, as feelings of unease and uncertainty surrounding trade conflicts heighten. Tariffs and other actions from the White House will continue to drive markets, along with inflation, labor market data, and ensuing Fed decisions.