US Stocks Fall After Tariff Announcement

The major indices declined as trade war threats, previously seen as a negotiating tactic, have become a reality.

On Monday, major U.S. stock indices declined nearly 2% following President Donald Trump’s announcement that tariffs on Mexico, China and Canada would go into effect on Tuesday. The S&P 500 fell 1.8%, and the Nasdaq Composite fell 3.6%. Shares of tech giant Nvidia fell 8.7%, and those of Tesla fell 3%, nearly 40% off highs following the November 2024 election.

By Tuesday morning, indices continued their fall, with many erasing gains made since the post-election rally.

The U.S. imposed a 25% tariff on all imports from Mexico and Canada, with an additional 10% tariff added to an existing 10% tariff on Chinese imports. All three countries have pledged retaliatory measures.

Markets had appeared to ignore tariff threats earlier in the year. Experts said a common thought among investors was that the threats of tariffs were a negotiating tactic intended to draw concessions from other countries. When Trump first announced tariff plans following his inauguration, markets also fell, but they quickly recovered when enactment of tariffs was delayed. Further tariff announcements were met with a muted response.

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“The sell-off that we are beginning to see has room to run (to the downside) as long as the tariff threats remain more than idle talk,” said Chris Zaccarelli, CIO of Northlight Asset Management, in a statement issued Monday. “Last month’s reprieve was just a temporary break in the downward trend, because a trade war is something the market didn’t believe was possible, so as one (or many) start to unfold, the market will begin pricing in the inevitable damage that will be done to our economy.”

Some strategists have warned that the inflationary impacts of these tariffs will result in the Federal Reserve not cutting interest rates; Treasury Secretary Scott Bessent said in an interview with Fox News on Monday that the administration is “set on bringing interest rates down.”

“The market is complacent regarding tariff impact and this is likely just the beginning with tariffs on Europe and universal ones to follow suit over the coming weeks,” said Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, in a statement. “This will be inflationary, and the Fed won’t likely be able to cut rates in this environment.”

Independent Schools Increasingly Using Outsourced CIO Providers

Nearly one-half of institutions surveyed by Commonfund reported using an OCIO.

By Matt Toledo

An increasing number of independent pre-k through 12th-grade schools reported outsourcing their investment management to outsourced CIO providers, Commonfund reported in its “Commonfund Benchmarks Study of Independent Schools,” which tracks performance and trends of these institutions’ endowments.

Approximately 46% of institutions surveyed by Commonfund reported using an OCIO in the 2024 fiscal year, up from 33% in fiscal 2023. Of those endowments that outsourced assets, an average of 98.5% of assets were outsourced.

Approximately 26% of endowments with less than $10 million outsourced the investment management of their assets. Approximately 59% of endowments that reported having between $10 million and $50 million in assets outsourced, and 43% of endowments with more than $50 million in assets outsourced.

Commonfund conducted the study of independent school endowments alongside the Business Leadership of Independent Schools.

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Returns and Asset Allocation

Per Commonfund, independent schools’ endowments returned an average 12.3% in the 2024 fiscal year. Over the past five, 10, 15 and 20 years, these institutions returned an annualized 7.7%, 6.7%, 8.0% and 6.9%, respectively.

These institutions allocated 35% of their portfolios to equities, 30% to alternative investments, 17% to non-U.S. equities, 14% to fixed income and 4% to short-term securities, cash and other assets.

Similar to university endowments, for which performance was tracked in a previous Commonfund study, larger endowments underperformed smaller ones in the 2024 fiscal year. They also allocated a larger percentage of their portfolios to private investments.

Endowments with less than $10 million in assets reported an average 1% allocation to alternative strategies. For endowments with $10 million to $50 million, they allocated 11% on average to these strategies. Endowments with more than $50 million in assets reported an average 34% allocation to alternatives.

The cohort of endowments with less than $10 million in assets also reported the highest returns: an average of 13.5%. Endowments with $10 million to $50 million reported average returns of 12.0%, while those with at least $50 million also reported 12.0% returns.