04/14/2025 Market Strategy
Don’t Keep Me Wonderin’
The Current Period of Uncertainty Presents Investors with a Need to Practice Patience
Key Takeaways
- We’ve updated our maximum drawdowns table to show the 18.9% decline in the S&P 500 index from its most recent peak at $6,144 on Feb. 19 through its close on April 8.
- Investors this week will be focused on Q1 earnings results. The season kicked off on Friday when several big banks reported. FactSet put bottom-up earnings growth expectations at 6.8% from a year earlier.
- Last week’s CPI inflation data showed surprising softness in prices in March as retailers offered discounts in the face of weaker demand.
- This week 32 more firms in the S&P 500 report including many financial firms as well as major names in the technology and consumer discretionary sectors. Another 127 firms report the week of April 21.
From Wall Street to Main Street business and consumer sentiment has suffered mood swings of late as tariff fever emanating from Washington raises concerns and interim fixes and unfixes as announced policies jostle asset class prices and investor conviction.
Uncertainties surrounding the “if, what, where and when” of the tariff regime as well as the exemptions surrounding tariff policy appear to us likely to remain challenges for traders and investors to deal with for the near term based on the complexities of trade, logistics, ideologies involved and global political wrangling.
Without some resolution near term to determine what the “end structure” of the tariff regime will look like, missives from the administration, their supporters, as well as from their detractors are likely to keep traders and investors wondering what to ponder day to day and week to week.
Last week’s market activity had stocks and other asset classes bouncing between gains and losses as market folk around the world moved positioning for risk one day and then unwinding same the very next day only to redo what earlier had been undone as the effects of announcements, news flow and varying degrees of negative and positive prognostication passed through the global marketplace.
Stateside stock prices managed to tick higher as the Dow Jones Industrial Average, the S&P 500 and the NASDAQ Composite, respectively, rebounded 4.95%, 5.7%, 7.3% in a week when large-cap stocks outperformed small- and mid-cap stocks.
Notwithstanding the effects of a holidayabridged trading calendar this week market participants will find themselves busy with Q1 S&P 500 earnings season results, interest rate determinations by several central banks outside the US and economic data releases that can shed further light on inflation, manufacturing, import and export prices, housing market conditions, mortgage issuance and employment data.
Gold Rose to New Record High
Last week saw gold reach a new record high, bond prices fall, and yields move higher even as inflation moved modestly lower.
First quarter earnings season got underway for the S&P 500 last week. With just 28 of 500 companies having reported it is needless to say too early to call but results so far show consensus expectations in line with results with some surprises that stand out to the upside.
We Remain Bullish
We remain positive on stocks and consider near-term volatility tied to the uncertainties surrounding the tariff regime structure—which for now remains in our view very much “a work in progress”—as not atypical of a period in market history which is laden with watershed caliber developments in technological innovation and changes likely to the global trade landscape that seek to create a fairer and likely more competitive global venue.
Investor hindsight throughout market history has often found that change tends to bring not only increased risk but significant opportunity to offset the presence of the former.
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