Christy D. Stoner, AIF®, President and CEO of Uwharrie Investment Advisors offers her quarterly perspective on current economic and market events. We are dedicated to your success and look forward to working alongside you to see your goals achieved. Learn more about our advisors.

Spring (2025, Q1)

The global economy is experiencing pronounced uncertainty as we enter the second quarter of 2025. The world appears somewhat different than it did even a few months ago, and much of that shift has been driven by fast-moving policy decisions, geopolitical ripple effects, and investor reactions to both. We would like to take a moment to share what we are seeing, what it could mean for your financial goals, and our thoughts about the road ahead.

Earlier this month, the United States government announced a sweeping set of tariffs under what was called “Liberation Day.” These new measures applied broadly across a wide range of imported goods, while also placing additional duties on imports from several major trade partners. The rollout was swift and unanticipated by many, prompting a sharp initial reaction in financial markets. Although there has been some recovery, the volatility that followed has highlighted how sensitive markets remain to major policy shifts. ¹

At the same time, data released for the first quarter showed a slight contraction in the United States economy – down about 0.3 percent. It was the first decline in several years and caught the attention of both economists and investors. The slowdown was attributed in part to businesses pulling forward imports ahead of the tariff deadline and a softening in consumer activity. Adding to the complexity, inflation has remained persistent, with the Federal Reserve’s preferred gauge – the core Personal Consumption Expenditures Price Index (PCE) – rising to 3.5 percent. This has led many to temper expectations for imminent interest rate cuts, as the Federal Reserve seeks to balance its goals of price stability and sustained growth. ^{2, 3}

Internationally, uncertainty remains elevated. In response to the United States actions, China imposed retaliatory measures and export restrictions that are beginning to affect global supply chains. In Europe, economic activity has been stable but cautious, with policymakers concerned about potential fallout from deepening trade disputes and broader geopolitical tensions. ^{4, 5}

The bond market also faced challenges in the first quarter of 2025. Concerns about inflation have created headwinds for fixed-income investors, as interest rates remain elevated and the Federal Reserve holds off on rate cuts. However, despite those pressures, bond returns have managed to outpace the broader equity markets so far this year. Much of the post-election rally in stocks has faded, undermined by uncertainty around global trade and a sharp pullback in many of the large technology companies that had previously driven market gains. In this environment, the typical inverse relationship between stocks and bonds has not always held, as both asset classes have reacted to shifting inflation expectations and evolving policy risk. This changing correlation highlights the importance of maintaining a well-diversified portfolio and staying focused on long-term objectives. ⁶

In times such as these, we are reminded that uncertainty is a constant feature of investing – even if the form it takes changes over time. Whether uncertainty emerges from elections, trade policy, inflation, or unexpected world events, markets will always respond to new information, and not always react calmly. Yet over the long term, investors who remain disciplined, diversified, and focused on their objectives tend to be rewarded for their patience.

Although headlines may feel urgent, our role is to help you look beyond the noise. We believe that long-term investing is rooted in thoughtful planning, not emotional reaction. That is why we remain committed to strategies that are grounded in fundamentals, tailored to your risk tolerance, and flexible enough to adjust when needed – without abandoning the bigger picture.
Most importantly, we want you to know that we are here to support you. Whether you would like to revisit your investment plan, discuss how current events might affect your long-term goals, or simply have a conversation to bring clarity in uncertain times, we welcome the opportunity to connect. Our team is always ready to help you navigate whatever the markets bring – with confidence, perspective, and a clear plan.

Thank you, as always, for your continued trust in us. We do not take that trust lightly. Please reach out if you have not already scheduled your portfolio review this year. We look forward to continuing this journey with you and remain dedicated to helping you move forward with clarity and confidence.

Citations

1. 2025 Stock Market Crash, Wikipedia, April 2025.
2. The Times (UK), “US economy went into reverse in run-up to Trump’s tariff shock,” April 30, 2025.
3. U.S. Bureau of Economic Analysis, PCE Price Index update, April 2025.
4. AP News, “China retaliates with rare earth export restrictions,” April 2025.
5. The Guardian, “Eurozone growth faces risks from US trade stance,” April 30, 2025.
6. Fidelity Viewpoints, “Quarterly Market Update: Bonds Steady as Stocks Struggle”, April 2025.

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The views expressed represent the opinion of Uwharrie Investment Advisors. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Uwharrie Investment Advisors believes the information to be accurate and reliable we do not claim or have responsibility for its completeness, accuracy or reliability. Statements of future expectations, estimates, projections and other forward-looking statements are based on available information and Uwharrie Investment Advisors’ view as of the time of these statements. Accordingly such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values from differences in generally accepted accounting principles or from economic or political instability in other nations. Past performance is not indicative of future results.

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