Anna's Markets Pulse

_{Just facts, you think for yourself}

Saturday, 5:45 AM

April 19, 2025

Good morning news friend! Here is a deeper view of what happened in the markets this week. 📰🌟

Market Pulse: Tariff Whiplash and Economic Crosscurrents (April 14-18, 2025)

Indices Retreat Despite Early Tariff Relief Rally

Major US stock indices ended the holiday-shortened week lower. They reversed some gains from the prior week's strong rally. The S&P 500 fell 1.5%, the Dow Jones Industrial Average lost 2.7%, and the Nasdaq Composite retreated 2.6% for the week ending Thursday, April 17.¹ US markets remained closed on Friday, April 18, for the Good Friday holiday.¹

The week began with optimism. Stocks rallied worldwide on Monday, April 14. News emerged over the weekend that the Trump administration had temporarily exempted certain technology products, including smartphones, computers, and chips, from newly announced reciprocal tariffs.³ This news lifted the S&P 500 and Dow by 0.8% each, while the Nasdaq gained 0.6% on Monday.³

However, this initial relief proved short-lived. Stocks closed well off their session highs on Monday.⁴ Sentiment soured as the week progressed due to confusion over the scope and duration of tariff exemptions, ongoing US-China trade tensions, mixed economic data, and concerning corporate earnings reports, particularly from UnitedHealth Group.¹ The market demonstrated significant volatility, reflecting the turbulence seen earlier in the month when the Dow experienced daily swings exceeding 2,000 points.⁸

Trade Policy Dominates Sentiment

Tariff policy remained the primary market driver. The initial positive reaction to exemptions for technology goods faded.⁴ Investors absorbed the reality that steep tariffs, up to 145%, remained on many Chinese goods, and China maintained retaliatory tariffs of 125%.² Further reports indicated that the exemptions might be temporary, with potential "special tariffs" still planned for smartphones and computers, adding to the uncertainty.¹⁰

The market's sharp positive response to specific exemptions, followed by a decline later in the week despite those exemptions holding, highlights extreme sensitivity to trade policy nuances.¹ This suggests investors struggled to price the actual economic impact amid conflicting signals. The market appeared to need clarity on the long-term trade framework, as temporary relief proved insufficient to sustain optimism.⁶

The effects of tariffs extended beyond direct import costs. Broader impacts included reduced consumer confidence, potential disruptions to global supply chains, delayed corporate investment, and increased financial market volatility.⁶ Consumer confidence plunged in March, with tariffs cited as a major concern.¹¹ Companies like Tesla explicitly halted parts imports due to tariff costs.¹² Analysts noted tariffs could hurt corporate profit margins and potentially delay investments.⁶ This implies the economic drag from trade tensions could be significantly larger than just the direct tax effect. S&P Global consequently cut its 2025 global real GDP growth forecast from 2.5% to 2.2%, citing these trade tensions.⁷

Economic Beat: Mixed Signals on Growth and Inflation

Economic data released during the week presented a mixed picture. March retail sales showed strength, rising 1.4% month-over-month, beating expectations and accelerating from the previous month.¹⁵ Sales excluding autos also rose 0.5%, exceeding forecasts.¹⁵ This initially suggested consumer resilience.

Manufacturing indicators, however, signaled weakness. The Empire State Manufacturing index remained in contraction territory.¹⁵ More dramatically, the Philadelphia Fed Manufacturing Index plunged to -26.4 in April, a sharp drop from March's +12.5 and far below expectations.⁹ This indicated a significant slowdown in regional manufacturing activity, potentially worsened by tariff concerns.⁷

Inflation data sent conflicting signals. March Import Prices fell 0.1% month-over-month, aided by lower oil prices.¹⁵ Earlier data showed headline Consumer Price Index (CPI) inflation moderated to 2.4% year-over-year in March.⁶ However, consumer expectations for inflation over the next year spiked to 6.7% in March, the highest level since 1981, likely reflecting worries about tariffs being passed through to prices.¹¹ Prior reports also showed an upward trend in core PCE inflation.¹⁹

The labor market remained tight. Initial jobless claims decreased to 215,000 for the week, below both expectations and the prior week's reading.¹⁵ Treasury yields fluctuated; the 10-year yield eased early in the week to 4.38% Monday from around 4.49% the previous Friday, providing some market relief.⁴ By Wednesday, it stood near 4.29%.⁹ Concerns about foreign demand for US Treasurys persisted amid trade tensions.⁷

The strong March retail sales data reflects past consumer behavior.¹⁵ This contrasts sharply with plunging forward-looking consumer confidence metrics from March, which cited tariff and financial worries.¹¹ It also contrasts with weak April manufacturing surveys indicating deteriorating business conditions.⁹ This divergence suggests current spending levels might not be sustainable if confidence and production continue to weaken, possibly foreshadowing a future spending slowdown.

Gold Watch: Safe Haven Demand Boosts Prices

Gold prices continued their upward trend amid market volatility and uncertainty. Gold futures gained ground through the week. Prices closed at $3,240.40 per ounce on Monday, April 14, then jumped significantly to close at $3,346.40 on Tuesday.²⁰

After a minor dip on Wednesday to $3,328.40, gold futures finished the week at $3,341.30 on Thursday, April 17.²⁰ This represented a weekly gain of approximately 3.1%. Intra-week highs reached near $3,371.90.²⁰

The rise in gold prices reflected increased risk aversion. Investors sought safety amid trade tensions and economic uncertainty.⁸ Gold's strength, even as the US dollar index showed some weakness (falling below 100 according to one report ⁸), underscored its role as a primary safe-haven asset. This relative decoupling from typical inverse dollar correlation highlights the intensity of underlying market anxiety, suggesting buying was driven more by fear than traditional currency dynamics. Some analysts raised price targets, citing central bank purchases and geopolitical risks.²¹

Weekly Market Summary (April 11 Close to April 17 Close)

Note: Treasury yields are approximate based on reported levels.

Technology & Growth: Tariffs, Earnings, and AI Investments Shape Volatile Week

Sector Snapshot: Mixed Reactions to Policy and Performance

Technology stocks experienced significant volatility. The sector initially rallied on Monday following news of temporary tariff exemptions for electronics.⁴ However, these gains evaporated as broader market weakness set in, compounded by sector-specific concerns about trade policy impacts and early earnings signals.¹ The tech-heavy Nasdaq Composite underperformed the S&P 500, declining 2.6% for the week ending April 17.¹

Key themes influencing the sector included the persistent impact of US-China trade tensions on supply chains and potential demand.⁴ Companies continued to announce or proceed with heavy investments in artificial intelligence infrastructure.²⁵ The week also saw the beginning of the technology earnings season, notably with Netflix reporting strong results.²

Company Updates

• Apple (AAPL): Shares jumped sharply at Monday's open, rising as much as 7.5% intraday on news exempting smartphones from tariffs, before closing up 2.2%.⁴ This optimism faded later in the week amid reports clarifying that "special tariffs" were still planned for these goods.¹⁰ Analysts adjusted price targets in response to the initial relief.²⁶ Apple shares closed at $202.52 on Monday but fell to $196.21 by Thursday's close ¹, a drop of about 3.1% from Monday's close. The company's significant manufacturing presence in China remains a key vulnerability in the trade conflict.⁴

• Nvidia (NVDA): On Monday, Nvidia unveiled ambitious plans for a $500 billion investment in US-based AI infrastructure manufacturing over the next four years, partnering with Foxconn and Taiwan Semiconductor.²⁵ Facilities are planned for Arizona (chip testing) and Texas (AI supercomputer testing).²⁵ Despite this long-term positive news, the stock faced pressure later in the week, declining 3% on Thursday.¹ This weakness stemmed from concerns about potential restrictions on its H20 chip exports to China and signs of slowing AI demand suggested by semiconductor equipment firm ASML's results.⁹ Nvidia shares were noted as falling slightly on Monday as well.⁴

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