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Investing.com -- US stocks have recently ended their worst quarter since 2022, according to deVere Group, a global financial advisory giant. The S&P 500 experienced a 4.6% fall in the first quarter of 2025, the steepest decline in nearly three years. This drop is largely attributed to rising fears that the ongoing tariff war, escalated by President Donald Trump, could lead the US into a dangerous economic situation characterized by slow growth and increasing prices.
Nigel Green, CEO of deVere Group, cautioned investors against expecting a quick recovery, indicating that there are multiple factors contributing to a potential further decline in the short term. Green highlighted the emergence of a stagflationary environment, not caused by external shocks, but rather by deliberate policy decisions. This scenario, according to Green, is detrimental for equities.
Investors are growing increasingly anxious as they anticipate President Trump’s upcoming Liberation Day event on Wednesday, where he is predicted to announce a new wave of universal tariffs. These tariffs would be in addition to the current levies on essential imports such as steel and aluminium, which have already disturbed supply chains and increased costs for American businesses.
Green warned that the market has not yet fully accounted for the impact of these potential additional tariffs. He pointed out a growing misalignment between political messaging and economic consequences. If tariffs continue to rise while demand decreases and inflation persists, it will be difficult to find any significant support level for US stocks in the near term.
This fear is mirrored in sentiment data, with both consumer and business confidence showing signs of weakening. Multiple key surveys have indicated a loss of momentum, particularly in the manufacturing and services sectors, which are especially sensitive to cost pressures and international uncertainty.
Green noted that companies are postponing investment and hiring decisions due to the lack of clarity. He criticized the current policy approach, describing it as unpredictable and detrimental for business leaders trying to plan for the future.
According to deVere analysts, the market’s Q1 drop may not be a temporary fluctuation, but could represent the initial stage of a broader reset as investors reassess earnings expectations, valuations, and geopolitical risk.
Green mentioned that the optimism that fueled last year’s rally, which was based on the expectation of falling interest rates and easing global trade tensions, has not materialized. Instead, the situation has moved in the opposite direction.
The current outlook poses a significant challenge for those who believed the US market could defy gravity through 2025. With monetary policy still tight, inflationary pressures being re-energized by protectionism, and corporate margins under threat, the risk of further sell-offs remains high.
For long-term investors, deVere emphasizes the importance of strategic positioning, risk management, and global diversification. The era of relying on US tech-heavy indices to bolster portfolios is, for now, in the past.
Green encouraged investors to reassess their assumptions, stating that while sharp rallies in response to specific events could still occur, the underlying trend has changed. The market is adjusting to a new political reality, and this adjustment is likely to be turbulent.
In light of the administration’s persistent aggressive trade stance, deVere is advising clients to stay alert to short-term volatility and to prepare for a wider range of scenarios.
Green concluded by differentiating between being fearful and being prepared. He expressed his belief that the market has not yet found its floor, but opportunities will arise for those who are vigilant and disciplined. He stressed that remaining stationary in the current environment is not a viable option.
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