Market Volatility 

This past week has sparked volatility in the markets. It's in the face of such challenges that our diversified, strategically balanced, long-term approach demonstrates its true value. Our goal has always been to withstand market ups and downs, minimize exposure to individual market events, and maximize potential returns through diversified investments across various asset classes.

While market reactions may introduce short-term volatility, keeping focus on your long-term financial goals remains paramount. Rest assured, Savvy is closely monitoring these developments and has begun to implement strategic adjustments (and continue to do so as necessary) to optimize your portfolio's performance.

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February Highlights

• U.S. Equities Pull Back Amid Growth Concerns
• Real GDP Growth Slows
• Emerging Markets Lead, Driven by China’s Tech Rally

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US Markets

After a strong start to 2025, February renewed scrutiny of the narrative of U.S. economic exceptionalism. Rising uncertainty around the implications of the administration’s policy agenda weighed on corporate and consumer sentiment, appearing to reignite concerns about growth. U.S. equity markets reflected this shift, with U.S. indices pulling back from recent highs— the Russell 2000 lagged with a -5.35% decline, and the S&P 500 slipped -1.30%. However, corporate earnings remained a bright spot, as 97% of S&P 500 companies have now reported Q4 2024 results, with 75% exceeding EPS expectations and 63% delivering positive revenue surprises¹—highlighting broad-based corporate resilience despite shifting macroeconomic conditions. Investor sentiment shifted in February, leading to a notable rotation into defensive and income-generating sectors. Consumer Staples (+5.19%), Real Estate (+4.18%), and Energy (+3.83%) outperformed, signaling a tilt toward stability amid macroeconomic uncertainty. On the other hand, cyclical and growth-oriented sectors struggled. Consumer Discretionary (-6.98%) and Technology (-2.29%) saw the largest declines, reflecting a weakening risk appetite that was potentially driven by rate concerns and shifting consumer spending trends.

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US Economy

In February, consumer confidence posted its sharpest decline since August 2021, reflecting growing uncertainty around the economic outlook. While the House of Representatives reached an agreement on a budget blueprint, the framework provided sufficient fiscal capacity to extend the 2017 Tax Cuts and Jobs Act but offered little clarity on potential new fiscal stimulus measures. Meanwhile, U.S. economic growth moderated—real GDP expanded at an annualized rate of 2.3% in Q4 2024, according to the second estimate from the Bureau of Economic Analysis (BEA)², decelerating from the 3.1% growth rate in Q3. This slowdown underscores a shift in momentum as policy uncertainty and tightening financial conditions weigh on both corporate and consumer sentiment.

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Global Markets

Emerging markets outperformed developed markets in February, driven by continued strength in Chinese technology stocks and a softening U.S. dollar. The U.S. Dollar Index (DXY) declined 0.86%, creating a tailwind for dollar-denominated global indices and supporting broader risk appetite across asset classes.

European equities outpaced U.S. markets, as investors increasingly priced in the potential for a ceasefire in Ukraine, boosting sentiment. Meanwhile, Asian equities—led by China—rose 10.68% for the month, reflecting renewed investor confidence. The enthusiasm surrounding DeepSeek’s advancements and high-profile engagements between Xi Jinping and senior business leaders signaled a potentially more accommodative regulatory environment, further fueling optimism in China’s equity markets.

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