Market Commentary

The market trended higher until February 19th. Since then, the S&P 500 has declined nearly 7% as of Thursday, March 6th, while the Nasdaq 100 has dropped almost exactly 10%. Year to date, the S&P 500 is down 2.28%, and the Nasdaq has fallen 4.50%.

What’s driving this decline? While some point to the Trump tariffs, pinpointing the exact cause of market movements is always difficult. The market has been rising for two years, and so far, this remains a relatively small pullback. We do not believe the Trump tariffs will exacerbate inflation. Although tariffs increase costs by adding taxes at the country of origin, history suggests limited inflationary impact. During the previous Trump administration, numerous tariffs were implemented, yet inflation remained low. Additionally, many proposed tariffs may not materialize, as they often serve as a bargaining tool for broader policy objectives.

Even when tariffs are enacted, their impact can be offset by other economic forces. For example, the U.S. is imposing new tariffs on various Canadian products—just as Canada has done with U.S. goods. However, the weakening Canadian dollar is effectively neutralizing some of the tariff’s impact.