The rollercoaster ride continued this week, and it doesn’t look like an immediate end is in sight. The ups, downs, lefts, and rights are starting to make market participants feel nauseous. And I don’t blame them, as we’ve seen some of the largest moves in the history of the major indices. Let’s take a step off the thrill ride to look at some of the most interesting snapshots from the week.
The S&P 500 has declined 4.7%, rallied 8.4%, plunged 5.45%, bounced 3.1%, and dropped 1.5%…and all this happened with the market only open for two hours on Monday, 4/7.
The VIX (a measure of expected market volatility, also called the “fear gauge”) closed above 50 on Tuesday, which was in the top 1% of historical readings. What has happened in the past following closes above 50? The S&P 500 gained over the next 1, 2, 3, 4, 5 years every time with above-average returns overall.
SPY (the best-known S&P 500 ETF) had three days in a row where the daily trading range was greater than 5%. This is highly abnormal.
This week, the S&P 500 experienced some of its most significant consecutive intraday swings ever.
West Texas Intermediate (WTI) crude oil is now effectively unchanged from 4 years ago, 10 years ago, and 20 years ago on demand concerns from the tariffs.
The percentage of University of Michigan respondents making unsolicited negative comments about news they’ve heard on government economic policy has surged to a record high of 60%.
The bond market is experiencing aggressive rate moves as the 10-year U.S. Treasury note has risen over 50 basis points this week. This was precisely the opposite of the desired move from the administration.
This week was a wild week, no doubt. Monday saw the rumor of a tariff pause, which shot markets almost 10% higher in a matter of minutes, only to come crashing back down when the rumor was squashed. Then, Wednesday morning, President Trump tweeted, “THIS IS A GREAT TIME TO BUY” at 9:37am. Hours later, he tweeted about the pausing tariffs (as well as the China tariff escalation). Markets went on to have some of their best days EVER (the Nasdaq recorded its second-best day ever). But, as the reality of the situation continued to sink in, equities retraced a considerable portion of their gains in Thursday’s action.
Needless to say, with the tariff moves changing from “reciprocal” to escalating to paused, it is no wonder markets don’t know what the next move will be. Looking through all of these extreme moves in one week, it is clear that uncertainty is still extremely high. And due to this, it becomes very hard (read: impossible) to price in where the market should be. So, until there is a permanent resolution on tariffs, we will continue to see elevated volatility.
However, at some point, this rollercoaster will stop. So, if you can, try to stomach the ride. If we learned anything this week, it’s that the unpredictable nature of financial markets is even more unpredictable in the current environment.
Markets / Economy
- We just witnessed one of the most volatile set of trading days in the history of the market. The S&P finished the week up 5.7%, the Nasdaq was up 7.3%, and the small-cap Russell 2000 was up 1.8%.
- Core CPI rose by 0.1% MoM in March, down from February and coming in below market expectations of 0.3%.
- Headline CPI fell by -0.1% MoM in March, well below market expectations of a 0.1% rise.
- PPI unexpectedly decreased -0.4% MoM in March, the first decline in PPI since October 2023, compared to forecasts of a 0.3% increase.
Stocks
- U.S. equities were in positive territory. Technology and Industrials were the top performers, while Real Estate and Energy lagged. Growth stocks led value stocks, and large caps beat small caps.
- International equities closed higher for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield increased 51 basis points to 4.49% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led for the week, followed by government bonds and corporate bonds.
