Last Week
“It’s good to be king, if just for a while
To be there in velvet, yeah, to give ’em a smile
It’s good to get high and never come down
It’s good to be king of your own little town”
-Tom Petty
The stock market posted its best weekly advance since early November 2023, but the bounce in prices felt manufactured and transitory. Specifically, on Wednesday morning, President Trump issued social media posts urging people to “BE COOL!” because “Everything is going to work out well,” adding, “THIS IS A GREAT TIME TO BUY!!! DJT”
Less than four hours later, he announced a tariff pause on every country except China, sending stocks up double digits, representing the biggest one-day price gains on record. The other four trading days added another gut-wrenching whipsawing wipeout of around 5% of value. Nevertheless, the S&P 500 finished up 5.7%, the Nasdaq Composite gained 7.3%, while small caps trailed with a 1.9% bounce. Advancing issues and decliners were evenly matched, and trading volume was extraordinarily high. The currency and fixed-income markets painted a much grimmer picture, with the yield of the 10-year Treasury jumping 50 basis points to 4.5% and the Dollar tanking over 3%. Once again, Gold was the big winner, soaring by almost 7% and setting new record highs. Although far from crisis levels, those markets suggest international investors are losing confidence in the United States.
Outside of the self-inflicted pain from the Trade War, the news showed an economy in good shape. The inflation data indicated that both consumer and producer prices slipped in March. Earnings season got off to a strong start as the big banks reported solid results but with cautious guidance given the tariff-related uncertainties. Unfortunately, the mood amongst consumers darkened further, with Consumer sentiment plunging 11% this month to a preliminary reading of 50.8, the University of Michigan said in its latest survey released Friday, the second-lowest reading on records going back to 1952. April’s reading was lower than anything seen during the Great Recession.
This Week
Trump’s Trade War will remain front and center. It is possible that there could be positive developments from new agreements with some of our trading partners, such as Japan and Vietnam. Any de-escalation of rhetoric between the U.S. and China would be a game changer. Over the weekend, President Trump’s administration granted tariff exclusions on smartphones, computers, and other electronics mainly imported from China, providing a big break to tech firms like Apple that rely on imported products. China said it was evaluating the impact of the exclusions. In a statement on Sunday, the Ministry of Commerce called the move a “small step by the U.S. to correct its wrong practice of unilateral ‘reciprocal tariffs’.”
Earnings season will kick into gear, as highlighted by companies in the financial and healthcare sectors. Given the uncertainties, the outlook for most companies will likely be cloudy.
It will be a four-day trading week, with the markets closed in observance of Good Friday.
We have had very little to say about the Chicago Sports Scene lately, although the Cubs are off to a good start, and the Bulls did finish the season looking better and are in the playoffs.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.