Markets caught in the crossfire of policy and uncertainty


Another week of rapid sell-offs has officially pushed U.S. equity markets into correction territory. Despite a strong rebound during Friday’s trading session, the S&P 500 closed Thursday more than 10% below its recent record high — reached just three weeks ago. This downturn marks one of the fastest 10% declines recorded since 1929, according to Bloomberg Research. The sell-off has been relentless, with few safe havens for investors as volatility remains elevated.

Chief Investment Officer Thierry Hasse

It Was Not Supposed to Be Like This

Just months ago optimism was high. The prevailing market narrative suggested that pro-growth policies, permanent tax cuts and sweeping deregulation would drive equities to new highs. However, escalating trade wars, deep cuts to government payrolls and the elimination of entire agencies have upended that outlook.

Consumer sentiment has taken a hit. The University of Michigan’s Consumer Sentiment Index for March dropped more than 10% from the previous month to 57.9 — the lowest level since November 2022.

More troubling still, corporate CEOs appear increasingly cautious, delaying major capital investments. Small businesses, which account for 80% of U.S. employment, report record levels of uncertainty — the highest since the National Federation of Independent Business (NFIB) began surveying in the 1970s (Source: NFIB, Apollo Chief Economist).

Where Do We Go From Here?

Friday’s rebound raises an important question: Was this a temporary relief rally, or are we in the early stages of a prolonged bear market? Could the sharp declines continue, leading to a recession? Or is this the healthy correction needed after two years of outsized market gains?

On the positive side, valuations have improved. The S&P 500’s price-to-earnings (P/E) ratio has declined from 22 to around 20. While still above historical norms, this level has previously acted as a floor for market stabilization (Source: CNBC). However, this assumes that after a soft patch in economic growth over the winter months, the U.S. economy resumes its 2% to 2.5% growth trajectory, allowing corporate earnings to grow steadily in 2025.

The biggest unknown remains the uncertainty surrounding tariffs. The Trump administration has yet to define what a successful outcome would look like in the numerous trade disputes it has initiated. Until investors and businesses can assess the full impact of these policies, market confidence will likely remain fragile, and volatility will persist.

Key Event: Federal Reserve News Conference

Despite Friday’s gains, any negative developments on the trade front could reignite selling pressure. This week’s key event will be Federal Reserve Chairman Jay Powell’s news conference scheduled for Wednesday afternoon. While the Federal Open Market Committee (FOMC) is not expected to change its monetary policy during this week’s meeting, Powell will likely face tough questions about how the administration’s policies are influencing the Fed’s decisions.

As the week unfolds, investors will be watching closely for signs of stabilization in the U.S. markets. Until clearer economic and policy signals emerge, the road ahead remains uncertain.


The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.