Market & Legal Update
March 2025
Market Update | Eggspensive Prices
Investors looked past tariff threats, and a disappointing inflation report to push the S&P 500 to a record high 6,144 mid-month, only to give back gains in the final weeks of February for the same reasons. The S&P 500 index was down 1.3% in February, however still positive at 1.4% for the year. The Dow Jones Industrial Average (DJIA) shed 1.4% last month. Year to date, the price-weighted DJIA, which focuses on established blue-chip companies, has exhibited less volatility and outperformed the S&P 500 by 1.9%. The tech-heavy NASDAQ fell 4%. Longer-term bond yields fell after stagnating for the previous two months, with the 10-year treasury declining to 4.24% from 4.58%. The inverse nature of falling rates lead to a 2.2% increase in the Bloomberg U.S. Aggregate Index in February. International stocks which have been trading at historic discounts began to catch up to U.S. markets jumping 7.3% in 2025, with the MSCI EAFE Index gaining an impressive 1.9% in February.
| Market Return Indexes | Feb 2025 | YTD 2025 | 2024 |
|---|---|---|---|
| Dow Jones Industrial Average | -1.4% | 15.0% | 16.2% |
| S&P 500 | -1.3% | 25.0% | 26.3% |
| NASDAQ (price change) | -4.0% | 28.6% | 43.4% |
| MSCI Eur. Australasia Far East (EAFE) | 1.9% | 3.8% | 18.2% |
| MSCI Emerging Markets | 0.5% | 7.5% | 9.8% |
| Bloomberg High Yield | 0.7% | 8.2% | 13.4% |
| Bloomberg U.S. Aggregate Bond | 2.2% | 1.3% | 5.5% |
| Yield Data | Feb 2025 | Jan 2025 | Dec 2024 |
| U.S. 10-Year Treasury Yield | 4.24% | 4.58% | 4.58% |
On February 1st, President Trump signed executive orders imposing 25% tariffs on Mexico and Canada, and a 10% tariff on China in addition to those carried forward from his first term. He said these tariffs would remain in place until the countries took steps to curb the flow of migrants and drugs into the U.S. This announcement sent markets spiraling as tariffs could increase costs for households as companies pass on increased import taxes to consumers. These tariff threats could be especially important to consumers who are still experiencing residual effects from the spike in prices caused by COVID-related supply chain issues. Within just a few days, President Claudia Sheinbaum of Mexico and Canadian Prime Minister Justin Trudeau had struck last-minute deals, postponing the impending tariffs 30-days. The S&P 500 made up lost ground following these announcements, hitting all-time highs before once again retreating below 6,000 amid a flurry of uncertainty sparked by a disappointing U.S. Composite PMI reading. Markets then looked to price in federal firings, threat of tariffs on imported semiconductors, President Trump doubling down on 25% tariffs on Canada and Mexico, geopolitical rifts with Ukraine, a disappointing sales and profit forecast for the world’s largest retailer Walmart, and a January CPI inflation data release.
After a solid December inflation reading, historically cold weather in January brought about a brisk rise in inflation with prices rising 0.5% from December, pushing the 12-month headline CPI reading to 3.0%. This monthly reading was above economists' milder expectations of 0.3% with higher than anticipated increases reflected in prices for used cars and auto insurance. When looking at more volatile indexes, an over 15% increase in egg prices from December accounted for two-thirds of the food at home index. The nationwide egg shortage has seen prices steadily increase since 2022 but has soared this year as the bird flu virus killed off over 300 million chickens in the U.S. thus far. This marks the largest one-month price increase for eggs since June of 2015. Core CPI, which strips out volatile food and energy indexes, rose 0.4% from December marking the largest increase in almost two years. Core inflation came in at 3.3% on an annual basis.
At the end of the month, the Fed’s preferred measure of inflation, the personal consumption expenditures index (PCE), showed inflation inching closer to the Federal Reserve’s 2% annual target. January’s PCE rose by 2.5% over the trailing 12 months, down from 2.6% in December. Although gradual, this was a welcomed report amid mounting fear that current administration policies could reignite inflation.
The unemployment rate fell marginally to 4% in January. At the same time, the U.S. Economy added 143,000 jobs to start the year, which was less than the 169,000 forecasted by economists. However, this flatline report was accompanied by amendments to both November and December job market counts, revised upward by a combined 100,000 jobs. In the face of geopolitical uncertainty, rapid policy changes, and market volatility, the U.S. labor market has remained even keel. The details of this job report are unlikely to move the needle on the Feds current wait-and-see mandate for interest rate cuts despite political pressure from the current administration to cut rates sooner. This suggests a comfort in the Fed’s ability to be more reactive when it comes to Q1 inflation numbers or any weak economic activity in labor markets. The CME FedWatch Tool projects a 95% likelihood that the Fed will keep rates at the current 4.25%-4.50% target range for their upcoming March meeting.
While Wall Street looks to understand the potential impact of policy decisions, none more prevalent than tariffs and their effect on consumer spending and inflation, international equities have seemingly been primed for strong performance. After two consecutive years of over 30% returns from U.S. large cap growth assets, selloffs and volatility to start 2025 were perhaps the perfect catalyst to jump start a recently benign international equity asset class. Despite recent U.S. exceptionalism, history shows equity outperformance compared to other markets worldwide are cyclical, with instances of foreign markets durably outperforming. It is not without its own headwinds as the deeply discount international asset class is facing uncertain trade policy, tighter fiscal policy, and slower than average economic growth. Rising valuations supported by European Central Bank rate cuts could be drivers of growth for international stocks moving forward, but only time will tell if they can clear the upcoming hurdles and keep up their outperformance.
Legal Update | Best Practices to Find Missing Plan Participants
Finding missing retirement plan participants is an ongoing — and necessary — challenge for employers. Whether your organization offers a defined contribution (DC) or a defined benefit (DB) pension plan, you have a fiduciary duty to find missing participants under the Employee Retirement Income Security Act of 1974 (ERISA).
WHO IS A MISSING PARTICIPANT?
A terminated employee who has benefits in a qualified retirement plan at their former employer, but has failed to keep their contact information current and is no longer managing their plan account.
Reasons for missing participants include employer turnover and job changes, relocation, death, company mergers and acquisitions, and nonresponsive participants.
The Pension Benefit Guaranty Corporation (PBGC) was the first federal agency to administer a program to hold retirement benefits for missing participants and beneficiaries in terminated retirement plans. The PBGC Missing Participants Program aims to help these participants and beneficiaries find and receive their benefits.
Follow Updated Guidance From the DOL and EBSA
The Department of Labor (DOL) has focused on the issue of missing participants for years, and works in conjunction with the Employee Benefits Security Administration (EBSA) to audit retirement plans and reinforce actions employers must take to locate lost participants and pay their benefits.
The DOL and EBSA have issued detailed guidance, including steps employers should take to locate missing participants:
An extensive list of best practices employers could adopt to minimize missing or nonresponsive participants. This guidance also highlights “red flags” that signify a missing participant problem.
Outlines investigative processes and case-closing practices EBSA uses to conduct Terminated Vested Participants Project (TVPP) audits of DB plans.
Authorizes plan fiduciaries of terminated DC plans, such as 401(k) and 403(b) plans, to transfer account balances of missing or nonresponsive participants to the PBGC Missing Participants Program.
Provides plan fiduciaries, under certain conditions, with an option to transfer retirement benefit payments (including uncashed checks) owed to missing participants or beneficiaries to a state unclaimed property fund, provided the accrued benefit is $1,000 or less.
The SECURE 2.0 Act of 2022 includes provisions to help participants locate their benefits in their former plans, and to minimize the number of missing participants:
- Auto-portability — If an employer agrees to join the auto-portability network, certain small retirement plan account balances for terminated employees that were automatically rolled into a default individual retirement account (IRA) from a prior employer’s retirement plan can be automatically rolled over to a new employer’s retirement plan, unless directed otherwise by the participant.
- Retirement savings lost and found — The DOL is creating a searchable retirement savings database to help individuals locate lost or forgotten retirement plan accounts.
Best Practices to Reduce Missing Participants
These EBSA best practices have been proven to reduce instances of missing or nonresponsive participants:
- Maintain accurate census information for the plan’s participant population. Periodically reach out to participants (current, retired and terminated) and beneficiaries to confirm or update their contact information such as email, home and business addresses, phone numbers, social media accounts and emergency contacts.
- Implement effective communication strategies. State upfront and prominently what the communication is about (e.g., eligibility to start payment of pension benefits, a request for
updated contact information, etc.). - Conduct missing participant searches. Check with designated plan beneficiaries and the participant’s emergency contacts (in the employer’s records) for updated contact information.
- Document procedures and actions. Document key decisions and steps taken
to implement the policies.
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There are an estimated 29.2 million left behind or forgotten 401(k) accounts, with average balances of |
These Searches Make Sense
Missing participants can also cause administrative burdens, increased plan costs and fiduciary risk for the organization. Here are reasons employers should address participant accounts:
- There are large amounts of money at stake. Each year, hundreds of millions of dollars are recovered for terminated, vested participants in retirement plans.
- Missing participants inhibit the ability to make timely required minimum distributions (RMDs), which may result in penalties to the employer and participant.
- Missing participants inhibit the ability to distribute death benefits to beneficiaries. This is another important reason to maintain up-to-date beneficiary election data.
- Missing participants may delay plan terminations, requiring another year of audit costs and governmental filings.
In FY 2024, EBSA’s enforcement program helped:
9,170terminated vested participants |
$432.6Min collected benefits |
Focus on Follow-Up Actions
Employers should establish proper procedures and designate an individual or team to ensure necessary follow-up efforts are taken.
Consider the following questions. Do you:
- Have a formal procedure for identifying missing participants?
- Conduct a full plan review for missing participants at least annually?
- Review uncashed check reports from the trustee?
- Conduct address searches for returned checks?
- Document steps taken annually to locate missing participants?
Retirement Resources for You
USI Consulting Group’s team of experts is happy to assist employers with all retirement plan compliance matters and changes in the market, including those discussed here, to help you mitigate risk and financial impact to your organization.
Questions? Contact your USICG representative, visit our Contact Us page or reach out to us directly at information@usicg.com.
Find the address and telephone number of your local USI Consulting Group office here.
* Source: Capitalize, The True Cost of Forgotten 401(k) Accounts, 2023
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This communication is published for general informational purposes and is not intended as advice or a recommendation specific to your plan. Neither USI nor its affiliates and/or employees/agents offer legal or tax advice.
An index is a measure of value changes in a representative grouping of stocks, bonds, or other securities. Indexes are used primarily for comparative performance measurement and as a gauge of movements in financial markets. You cannot invest directly in an index and, for comparative purposes; they do not reflect the effect of the various fees inherent in actual investment vehicles.
The S&P 500 Index is a market value weighted index showing the change in the aggregate market value of 500 U.S. stocks. It is a commonly used measure of stock market total return performance.
The Dow Jones Industrial Average is a price weighted index comprised of 30 actively traded blue chip stocks; primarily industrial companies, but including some service oriented firms.
The NASDAQ Composite Index is a market-value weighted index that measures all domestic and non-U.S. based securities listed on the NASDAQ Stock Market.
Gross Domestic Product (GDP) is the market value of the goods and services produced by labor and property in the U.S. It is comprised of consumer and government purchases, net exports of goods and services, and private domestic investments. The Commerce Department releases figures for GDP on a quarterly basis. Inflation adjusted GDP (or real GDP) is used to measure growth of the U.S. economy.
The MSCI Europe and Australasia, Far East Equity Index (EAFE) is a market capitalization weighted unmanaged index developed by Morgan Stanley Capital International to measure approximately 1,100 securities in 21 major overseas stock markets. It is a commonly used measure for foreign stock market performance.
The Barclays Capital U.S. Aggregate Index covers the U.S. Dollar denominated investment grade, fixed-rate, taxable bond market of SEC-registered securities.
The Barclays Capital U.S. Corporate High Yield Index covers the U.S. Dollar denominated, non-investment grade, fixed income, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s Fitch, and S&P is Ba1/BB+/BB+ or below.
The MSCI Emerging Markets Index (EM) is a free-float-adjusted market-capitalization index developed by Morgan Stanley Capital International. It is designed to measure the equity market performance of 26 emerging market countries.
The 10 Year Treasury Yield is the interest rate the U.S. government pays to borrow money for a 10-year period. In addition to influencing how much the government pays to borrow over this time-frame, the 10-year Treasury Yields also determines how much investors earn by investing in this debt and it is a good indicator of investor sentiment The higher the yield, the better the economic outlook.
Market Update is a monthly publication circulated by USI Advisors, Inc. and is designed to highlight various market and economic information. It is not intended to interpret laws or regulations.
This report has been prepared solely for informational purposes, based upon information generally available to the public from sources believed to be reliable, but no representation or warranty is given with respect to its completeness. This report is not designed to be a comprehensive analysis of any topic discussed herein, and should not be relied upon as the only source of information. Additionally, this report is not intended to represent advice or a recommendation of any kind, as it does not consider the specific investment objectives, financial situation and/or particular needs of any individual client.
Investment Advice provided by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. 95 Glastonbury Blvd., Suite 102, Glastonbury, CT 06033. USI Consulting Group is an affiliate of both USI Advisors, Inc. and USI Securities, Inc. | 5025.S0304.0006
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