S&P 500 posts worst quarter since 2009 ahead of Liberation Day
The S&P 500 index underperformed global stocks by 9.6% during the first quarter of 2025, marking the worst quarterly margin since 2009.
The Kobeissi Letter, a popular analyst of the global markets, highlighted on X (formerly Twitter) on Apr. 1 that the last quarter was a tough one for the U.S. stocks.
Though the MSCI All Country World Index (MSCI ACWI) excluding the US soared 5.0% in the last quarter, the S&P 500 fell 4.6%. In contrast, the S&P 500 outperformed global stocks by a massive 10% in Q4 2024.
The MSCI ACWI is a stock market index that measures the performance of large and mid-cap companies across 23 developed and 26 emerging market countries.
Note that the U.S. economic policy uncertainty index is also rising.
The analyst highlighted how the S&P 500 rallied 63% and 50% over a year following the 2020 and 2009 uncertainty surges. In contrast, the index fell 17% and 9% over a year following the 2001 and 2008 uncertainty surges. How the index will perform over the next few months remains to be seen.
President Donald Trump's tariff war, a new phase of which begins on Apr. 2 that is dubbed the Liberation Day, has led to anxiety around inflation in the market.
The 2-year breakeven inflation rate has jumped the highest since the March 2023 banking crisis to 3.27%, the analyst warned.
The 2-year breakeven inflation rate is a measure of the expected inflation rate over the next two years. It means the market expects the inflation rate to exceed 3% over the next 2 years.
The Kobeissi Letter has already warned of a 'hot' inflation during the upcoming quarter.
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