Quick Takes
- Equities Fell. U.S. stocks fell in March with the S&P 500 index falling 5%, the Nasdaq 100 falling 4.8%, and the Dow falling 5.2% as the War in Iran and concerns over private credit and AI’s economic impacts on major companies all contributed to stock market weakness..
- Inflation & Interest Rates. The 10Y treasury yield rose sharply in March from 4% to 4.3% as the Iran War created new inflation risks and the Pentagon asked for more funding from Congress to execute the war effort. Rate cut hopes waned as markets are now starting to price in no Fed cuts for 2026.
- Google & The Memory Chip Shortage. In recent months, memory chip stocks like Micron Technologies and Korea’s SK Hynix have rallied as the AI boom has led to a shortage of memory chips. These names gave back some of their gains in March as Google’s TurboQuant technology can reduce the memory intensity of AI models.
- Private Credit Woes. Investor concerns around private credit also contributed to volatility in March. Private credit funds run by Apollo, Blue Owl, Oaktree, and others experienced higher redemption requests on investor concerns about exposure to software borrowers who could face AI disruption.
Asset Class Performance
U.S. large caps performed in-line with small caps in March as the War in Iran raised concerns about energy prices and inflation. Emerging and Developed market equities fell more than U.S. equities and Developed markets wiped out their YTD gains. Fixed income markets also fell on concerns over inflation and interest rate expectations.
Markets & Macroeconomics
The U.S. economy added 178,000 jobs in March, the most since late 2024, exceeding consensus estimates of a 65,000-job gain and marking the fifth consecutive cycle of a negative jobs report being followed the next month by a positive read. Unemployment ticked down to 4.3% from 4.4%, while the participation rate fell to 61.9%, the lowest since 2021. The jump in payrolls was led by a rebound in healthcare employment post-strikes, but job gains were noted widely across industries, including rebound in accommodation and construction. This reversal comes as March’s 98,000 job loss was revised down to -133,000. Initial jobless claims continued lower in March, ending the month at 202K, near the lowest in two years. Continuing jobless claims continued lower as well, with the four-week moving average hitting 1.838M. Economists argue that since unemployment duration has increased, that some of the fall-off could be caused by people reaching the maximum The U.S. economy added 178,000 jobs in March, the most since late 2024, exceeding consensus estimates of a 65,000-job gain and marking the fifth consecutive cycle of a negative jobs report being followed the next month by a positive read. Unemployment ticked down to 4.3% from 4.4%, while the participation rate fell to 61.9%, the lowest since 2021. The jump in payrolls was led by a rebound in healthcare employment post-strikes, but job gains were noted widely across industries, including rebound in accommodation and construction. This reversal comes as March’s 98,000 job loss was revised down to -133,000. Initial jobless claims continued lower in March, ending the month at 202K, near the lowest in two years. Continuing jobless claims continued lower as well, with the four-week moving average hitting 1.838M. Economists argue that since unemployment duration has increased, that some of the fall-off could be caused by people reaching the maximum producer side, February PPI had the hottest monthly reading since July 2025, with headline rising 0.7% MoM, well above expectations of 0.3%. On a YoY basis, headline PPI jumped to 3.4% from January’s reading of 2.9%. Goods prices swung heavily, with food prices rising 2.4% while services remain sticky, rising 0.5%. On the sentiment side, University of Michigan’s consumer sentiment survey showed a 3.3-point drop in March to 53.3, snapping a four-month streak of gains as the Iran conflict weighed on consumer expectations. However, the CB Consumer Confidence survey showed a 0.6-point uptick in March to 91.8. On monetary policy, the FOMC voted 11-1 to hold the Fed’s policy rate steady at their March meeting as sticky inflation, a choppy labor market, and potential inflationary pressures from the energy shock in Iran compound to make a complicated macroeconomic outlook. The dot-plot showed that members still expect just one rate cut in 2026, while CME’s FedWatch shows that the markets are pricing in effectively no rate cuts in 2026.
Bottom Line: March’s jobs blew past expectations, but the broader picture is muddy as inflation and sentiment send mixed signals, while markets price in zero rate cuts in 2026.
©2025 Prime Capital Investment Advisors, LLC. The views and information contained herein are (1) for informational purposes only, (2) are not to be taken as a recommendation to buy or sell any investment, and (3) should not be construed or acted upon as individualized investment advice. The information contained herein was obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Investing involves risk. Investors should be prepared to bear loss, including total loss of principal. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance is no guarantee of comparable future results.
Source: Sources for this market commentary derived from Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds June be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4% Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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