Equities
The S&P 500 returned -1.0%; the damage would have been worse if not for a 1.6% window-dressing rally in the final two hours of month-end trading. The NASDAQ dropped -3.5% as the Mag 7 stocks fell 4.0% for the week. Treasury yields fell to their lowest level of the year amid a host of concerns: a slowing economy, deteriorating consumer sentiment, geopolitical tensions, and negative investor sentiment. Information technology (-4.0%) and communication services (-2.5%) were the worst-performing sectors in the S&P 500; financials (+2.8%) and real estate (+2.2%) were the leaders. EAFE markets returned -0.8%, with the U.K. (+2.0%) and Europe (+0.2%) leading; Japan (-3.0%) dragged on returns. EM markets returned -4.3% with broad-based selling amid concerns about tariffs.
From a valuation perspective, U.S. markets (other than midcaps) trade above +1 standard deviation based on historical forward P/E ratios as the S&P 500 is at +1.8 and the NASDAQ is at +1.0. For the next 12 months, EPS growth for the S&P 500 is expected to be 10.3% (vs. 6.9% annualized over the last 20 years). For the next 12 months, EPS growth for NASDAQ is expected to be 22.5% (vs. 10.7% annualized over the previous 20 years). All U.S. indices, including the S&P 500 (US Large Cap), NASDAQ, Russell Midcap (US Midcap), and the Russell 2000 (US Small Cap) trade at or above their 20-year averages based on forward P/E ratios while the MSCI EAFE (Non-US Developed Market Equities) and MSCI EM (EM Equities) are inline.
Fixed Income
Investment grade fixed income sectors posted positive returns as rates fell across the curve, though spreads widened. Municipals returned +0.6%, US AGG returned +1.2% and US IG returned +1.1%. HY bond returned 0.4% amid modest spread widening, while bank loans returned 0.0%. EM debt returned +0.3% as the US dollar rose 0.9%.
Rates
Rates fell across the curve amid the increasing concerns of slowing economic growth and deteriorating consumer sentiment; the 10-year yield dropped for the 7th consecutive week to its lowest level of the year. The recession-watch 3M-10Y spread compressed 22bps to -10bps and is inverted once again. The 2Y-10Y spread compressed 1bp to +22. Rates fell in other developed markets. The BTP-Bund spread is at 1.13%. 5-year breakeven inflation expectations fell 1bp to 2.63% (vs. a low of 1.88% on Sept 10); 10-year breakeven inflation expectations fell 5bps to 2.37% (vs. recent low of 2.03% on Sept 10); the 10Y real yield fell 17bps to 1.84%. The market now expects between two and three cuts in 2025 vs the Fed’s guidance of two cuts. At year-end 2025, the market expects the Fed Funds rate to be 3.7% vs. the Fed’s guidance of 3.75%-4.00%.
Currencies/Commodities
The dollar rose 0.9%. The commodities complex fell 2.7%, while energy prices fell 2.0% for the week. Brent prices were 1.7% lower to $73/bbl. US natural gas prices fell 9.4% while European gas fell 6.5% due to weather forecasts.
Market monitors
Volatility rose for equities and bonds (VIX = 20, MOVE = 104); the 10-year average for each is VIX=18, MOVE = 78. Market sentiment (at midweek) dropped alarmingly from -11 to -41 as both bullish sentiment dropped and bearish sentiment increased.
Weekly Commentary
Investment Commentary – March 3, 2025
Equities
The S&P 500 returned -1.0%; the damage would have been worse if not for a 1.6% window-dressing rally in the final two hours of month-end trading. The NASDAQ dropped -3.5% as the Mag 7 stocks fell 4.0% for the week. Treasury yields fell to their lowest level of the year amid a host of concerns: a slowing economy, deteriorating consumer sentiment, geopolitical tensions, and negative investor sentiment. Information technology (-4.0%) and communication services (-2.5%) were the worst-performing sectors in the S&P 500; financials (+2.8%) and real estate (+2.2%) were the leaders. EAFE markets returned -0.8%, with the U.K. (+2.0%) and Europe (+0.2%) leading; Japan (-3.0%) dragged on returns. EM markets returned -4.3% with broad-based selling amid concerns about tariffs.
From a valuation perspective, U.S. markets (other than midcaps) trade above +1 standard deviation based on historical forward P/E ratios as the S&P 500 is at +1.8 and the NASDAQ is at +1.0. For the next 12 months, EPS growth for the S&P 500 is expected to be 10.3% (vs. 6.9% annualized over the last 20 years). For the next 12 months, EPS growth for NASDAQ is expected to be 22.5% (vs. 10.7% annualized over the previous 20 years). All U.S. indices, including the S&P 500 (US Large Cap), NASDAQ, Russell Midcap (US Midcap), and the Russell 2000 (US Small Cap) trade at or above their 20-year averages based on forward P/E ratios while the MSCI EAFE (Non-US Developed Market Equities) and MSCI EM (EM Equities) are inline.
Fixed Income
Investment grade fixed income sectors posted positive returns as rates fell across the curve, though spreads widened. Municipals returned +0.6%, US AGG returned +1.2% and US IG returned +1.1%. HY bond returned 0.4% amid modest spread widening, while bank loans returned 0.0%. EM debt returned +0.3% as the US dollar rose 0.9%.
Rates
Rates fell across the curve amid the increasing concerns of slowing economic growth and deteriorating consumer sentiment; the 10-year yield dropped for the 7th consecutive week to its lowest level of the year. The recession-watch 3M-10Y spread compressed 22bps to -10bps and is inverted once again. The 2Y-10Y spread compressed 1bp to +22. Rates fell in other developed markets. The BTP-Bund spread is at 1.13%. 5-year breakeven inflation expectations fell 1bp to 2.63% (vs. a low of 1.88% on Sept 10); 10-year breakeven inflation expectations fell 5bps to 2.37% (vs. recent low of 2.03% on Sept 10); the 10Y real yield fell 17bps to 1.84%. The market now expects between two and three cuts in 2025 vs the Fed’s guidance of two cuts. At year-end 2025, the market expects the Fed Funds rate to be 3.7% vs. the Fed’s guidance of 3.75%-4.00%.
Currencies/Commodities
The dollar rose 0.9%. The commodities complex fell 2.7%, while energy prices fell 2.0% for the week. Brent prices were 1.7% lower to $73/bbl. US natural gas prices fell 9.4% while European gas fell 6.5% due to weather forecasts.
Market monitors
Volatility rose for equities and bonds (VIX = 20, MOVE = 104); the 10-year average for each is VIX=18, MOVE = 78. Market sentiment (at midweek) dropped alarmingly from -11 to -41 as both bullish sentiment dropped and bearish sentiment increased.
Disclosure and Source
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2025 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.
Talk To Us