The abbreviated week of trading on Wall Street was another uneven one for stocks. (The U.S. equity and bond markets are closed on Friday, April 18th for the Good Friday holiday.) The continued uncertainty about the Trump Administration’s tariff policies—and the potential impact on GDP growth and the inflation situation—has unnerved investors and resulted in heighted volatility in the world’s equities and fixed-income markets.
This week, the equity market witnessed some initial buying on hopes that President Trump would continue to make some tariff exemptions, as the United States renegotiates trade deals with many of its trading partners. This excludes China, with the world’s two largest economies digging in deeper as their ongoing trade war intensifies.
Some recent encouraging earnings news from the banking industry, including strong financial results from Goldman Sachs (GS), JPMorgan Chase (JPM), and Bank of America (BAC), also provided some support for stocks. This lasted a few sessions, until Wednesday afternoon, when some news from the Federal Reserve sparked a late-session selloff.
The major equity averages fell anew following comments from Federal Reserve Chairman Jerome Powell that the Trump Administration tariffs will hurt the U.S. economy. In summary, Chairman Powell warned that the Trump levies could put the economy on a path toward weaker growth, higher unemployment, and faster inflation, which could be termed as a period of stagflation. The gloomy Fed outlook, along with news of increased tariffs on foreign-produced semiconductor products and a dour first-quarter report from healthcare behemoth UnitedHealth Group (UNH), weighed on the major indexes at the end of the week.
On Thursday, the market turned in a mixed performance. The Dow Jones Industrial Average and technology heavy NASDAQ Composite finished lower by 527 and 21 points, respectively, with the index of 30-bellwether companies hurt by the aforementioned sharp decline of UnitedHealth Group shares. Conversely, the broader S&P 500 Index and small-cap Russell 2000 added seven and 14 points, respectively. For the abbreviated week, the Dow 30, NASDAQ Composite, and the S&P 500 Index fell 2.7%, 2.6%, and 1.5%, respectively. On the positive side, the CBOE Volatility Index (or VIX), also known as the “fear gauge,” fell nearly 20%, to 30.23. However, it still remains at a level indicative of an oversold market.
Looking forward to next week, the attention of Wall Street will remain on the global trade developments, as well as the quarterly results and commentary from Corporate America. The quarterly results will begin to pour in, with reports expected from a few industry giants, including Tesla (TSLA) and Alphabet (GOOG). Most of the other Magnificent Seven companies, including Microsoft (MSFT), Apple (AAPL), and Amazon.com (AMZN), will report their latest results around the end of this month. The investment community will be paying close attention to what the technology leaders are saying about the Trump tariffs and the expected financial impact on their companies. Meanwhile, the news on the economy will be rather light, though we will get the latest Federal Reserve Beige Book summation of economic conditions, along with data on new home sales, durable orders, and initial and continuing unemployment claims. - William G. Ferguson
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
