Stocks rose on Tuesday, with the S&P 500 closing up 2.9% while the Nasdaq rose 3.8% and the Dow gained 1,125 points.
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But this excellent day capped what was a terrible month for US stocks. The S&P 500 fell 5.09% in March, while the Nasdaq Composite fell 4.75%.
The US-Israeli war against Iran and the near-total blockade of the Straits of Hormuz, a narrow, Iranian-controlled waterway through which a fifth of the crude oil used to flow daily, weighed heavily on markets throughout the month.
Tuesday also marks the end of the first quarter of the year, and one in which the S&P 500 and Nasdaq both posted their worst annual starts since 2022, as markets reeled from Russia’s invasion of Ukraine.
In the first quarter, the S&P 500 fell 4.6% and the Nasdaq fell 7.1%.
Oil prices, on the other hand, increased last month, increasing the cost of fuel and causing a major effect of higher prices around the world.
Brent, the international oil benchmark, posted its biggest monthly percentage increase, after rising more than 60%. The price of US West Texas Intermediate crude oil also rose in March, rising more than 50% to its biggest one-month gain since 2020.
For millions of drivers in America, these increases are reflected in higher gas prices. And here, too, last month was amazing. The average price of unleaded gasoline reached $4 per liter on Tuesday, up more than 34% in just four weeks.
But it’s not just gas prices that have hit US households this month.
More than half of all adults in the United States own stocks, usually through their own retirement accounts and the broader funds these managed accounts invest in. Most of the time, market declines do not change the value of these various types of retirement accounts.
But the month of March was a different story.
“Stocks have been following the lead of oil prices at an unprecedented rate for the past few weeks, and if the US pulls out of the Middle East Strait remains blocked, energy markets will remain responsible, keeping prices high,” Bespoke Investment Group analysts wrote on Tuesday.
“The longer prices are high and supplies are limited, the worse it will be for the global economy and ultimately for stock prices,” they added.
The wild market swings of Trump’s second administration are in stark contrast to how President Donald Trump has said markets will react if he is re-elected in 2024.
“There are many people who say that the only reason the Stock Market is up is because I am leading in all the Polls, and if I do not win, we will have a CRASH of the same ratings as in 1929,” Trump wrote on Truth Social in May of 2024, while campaigning for the presidency.
Shortly after his election in 2024, Trump was asked if he believed stock market indicators were good barometers of his performance in office. “To me…all together, it’s very important,” Trump told CNBC.
But during the first 14 months of his second term, US markets experienced the sharpest decline in history.
In February and March of last year, the president’s sweeping tax policies rattled the market, pushing the S&P 500 into its seventh-fastest correction ever. A correction is when a stock or index falls 10% from its record high.
More than a year later, the S&P 500 is not far from doing it again. As of Tuesday’s closing bell, the index is down 6.7% from its January high.
As oil prices rise, stocks generally fall given that higher oil prices usually lead to higher prices in many industrial sectors over time.
Already, inflation is on the rise worldwide. On Tuesday morning, eurozone inflation reached 2.5%, up from 1.9% last month, according to the European Central Bank.
On Tuesday, Japan’s Nikkei 225 recorded its worst month since 2008. In Europe, the Stoxx 600 index posted its worst month since 2022.
Two close corrections in just over a year show how volatile the administration’s policies have been in the markets.
Still, since Trump took office for the second time, the S&P 500 has risen by 8%, although last year global stocks far outpaced the broader US index.
By 2025, global stocks as measured by the MSCI ACWI ex USA index rose by around 30%, while American stocks rose by 16%. Global stocks have not beaten U.S. stocks by that much during the first year of a president’s term since 1993, according to data from Bloomberg.
In recent weeks, Trump has again pointed to the Dow’s recent 50,000 milestone as a sign that the markets are doing well under his leadership.
“You know, it’s crazy, I hit 50,000 in the Dow,” Trump said at an investment conference in Florida on Friday. “People said that wouldn’t happen in four years.”
“Then we hit 7,000 on the S&P,” Trump added. “People say that’s more difficult than hitting 50,000 in the Dow.”
By Tuesday, the Dow had fallen more than 3,600 points since hitting 50,000, a decline of about 7.5%.
