It has been a rocky start to the year overall for U.S. equities. The S&P 500 rallied about 5% to a new all-time high by February 19th, only to retreat nearly 10% over the next several weeks. By the quarter’s end, the index was down 4.3% year-to-date and since then has fallen further with historic levels of volatility.

In our view, two central themes drove the market’s weaker performance in Q1: growing investor caution toward AI-related companies and increased uncertainty around U.S. trade and economic policy.