Investment professionals nationwide say their clients are grappling with an accumulation of economic uncertainties as they enter the second quarter, including concerns about ongoing conflicts, volatile energy costs, and private credit market disruptions.
Despite a strong rally on the final trading day of March that marked the year’s best single-day performance, U.S. stock indices still posted their weakest quarterly results since 2022. The S&P 500 fell 4.6% during the first three months of the year.
This unease represents a fundamental change in how financial professionals view market risk. The traditional approach of spreading investments across different asset types, which worked reliably for years, now faces new challenges as advisors question whether past market behavior will predict future trends.
Mark Stancato from VIP Wealth Advisors in Decatur, Georgia, explained the current environment: “Markets can handle bad news. What they struggle with is a lack of clarity about policy direction and end goals. That’s what we’re seeing, not just equity volatility but a broader sense that outcomes are hard to model.”
The first quarter saw weakness across both stock and bond markets, with 10-year Treasury yields climbing from 4.01% in early March to peaks of 4.44% by month’s end. Even gold, typically considered a safe investment during turbulent times, experienced its worst month since October 2008 with a 13% decline in March.
Lisa Kirchenbauer, who works at Omega Wealth Management in Arlington, Virginia, described the current climate: “This is one of the toughest economic/market situations I’ve ever seen.”
Jim Carroll, a senior wealth advisor at Ballast Rock Private Wealth in Charleston, South Carolina, noted that daily market swings increased during the first quarter, even though overall market declines remained relatively controlled.
Matt Dmytryszyn, who serves as chief investment officer at Composition Wealth, expressed concern that mounting economic pressures might alter how wealthy families approach spending decisions, potentially impacting the broader economy.
Dmytryszyn warned that growth factors could weaken under current conditions. Should this occur, economic recovery would depend more heavily on artificial intelligence productivity improvements and spending by affluent consumers. If these elements fail to deliver, he cautioned, “we could see a two-phase equity market decline, one driven by the fear and impact of the war with Iran, with a second stemming from a U.S. economic recession.”
David Haas of Cereus Financial Advisors in Franklin Lakes, New Jersey, worries about the possibility of stagflation – a rare but troubling combination of rising prices and economic stagnation.
“I am not expecting 7% inflation, but it’s likely to be north of 4%,” Haas stated. He anticipates that elevated oil costs and supply chain problems could slow economic expansion. “Not necessarily recession, but maybe close.”
Many advisors find the concurrent decline in both stocks and bonds particularly troubling, as it mirrors the challenging conditions of 2022 when both investment categories lost value and provided no safe refuge for investors.
Jon Ulin of Ulin & Co Wealth Management in Boca Raton observed: “Simultaneous weakness in both stocks and bonds has exposed the limits of the traditional 60/40 cushion investors have counted on for decades.”
Multiple advisors emphasized that the sheer number and complexity of current issues presents unprecedented challenges.
Kirchenbauer noted that this uncertainty appears to be affecting client behavior, as she has observed reduced responsiveness to her communications.
“Are they numb, overwhelmed, petrified?” she wondered.
