It’s the end of the first quarter! And boy has the reaction to that statement changed.
Several weeks ago, investors wanted Q1 to go on forever. Now? They can’t wait for it to be over. All because of the swoon that started in mid-February and continued right up until the quarter’s closing days.
So, where do things stand? Here’s my MoneyShow Chart of the Day. It shows the performance of a wide range of ETFs tracking most major indices and asset classes.
Gold, Treasuries Lead...Small Caps, Tech Lag in Q1?
Data by YCharts
You can see right away what the big winner was...gold! The SPDR Gold Shares (GLD) gained 17.3% in the quarter, adding to stellar gains it racked up in 2024. Foreign stocks also did well, with the Vanguard Developed Markets Index Fund (VEA) up 7.1% and the iShares MSCI Emerging Markets ETF (EEM) rising 4.6%. Treasuries offered up some protection, with the iShares 20+ Year Treasury Bond ETF (TLT) climbing 3.2%.
On the flip side, small cap US stocks got smoked. The iShares Russell 2000 ETF (IWM) slid 9.2%. Big Tech wasn’t far behind, with the Invesco QQQ Trust (QQQ) down 8.2%. The SPDR Dow Jones Industrial Average ETF (DIA) fared better, losing just 2.3%, while the SPDR S&P 500 ETF Trust (SPY) essentially split the difference, dropping 5.1%.
What happened? What changed the trajectory of markets so radically, so quickly? President Trump’s tariff and trade war campaign is at the top of the list. While the president believes his policies will have significant long-term benefits…Wall Street expects significant, negative side effects in the shorter term.
Investors also started to question the durability of the US economic expansion, given falling consumer confidence and rising uncertainty in Corporate America. Plus, many of the Artificial Intelligence (AI) plays that led the market on the upside gave up significant ground in the quarter. The catalyst: Worries about cutbacks in AI-related tech spending.
Bottom line? Q1 started off great…but it’s not ending well. A market led by gold and Treasuries is great if you own those assets (and I’ve been bullish on both). Yet it’s not what you want to see if you’re bullish on equities. Let’s hope Q2 has better things in store for all of us!
