Stock Market Today: April 7th - 11th, 2025

Welcome to the trading week of April 7th!

Dow drops 2,200 points Friday, S&P 500 loses 10% in 2 days as Trump's tariff rout deepens: Live updates



The stock market was pounded for a second day Friday after China retaliated with new tariffs on U.S. goods, sparking fears President Donald Trump has ignited a global trade war that will lead to a recession.

Here’s a tally of the stock market damage:

• The Dow Jones Industrial Average dropped 2,231.07 points, or 5.5%, to 38,314.86 on Friday, the biggest decline since June 2020 during the pandemic. This follows a 1,679-point decline on Thursday and marks the first time ever that it has shed more than 1,500 points on back-to-back days.
• The S&P 500 nosedived 5.97% to 5,074.08, the biggest decline since March 2020. The benchmark shed 4.84% on Thursday and is now off more than 17% off its recent high.
• The Nasdaq Composite, home to many tech companies that sell to China and manufacture there as well, dropped 5.8%, to 15,587.79. This follows a nearly 6% drop on Thursday and takes the index down by 22% from its December record, a bear market in Wall Street terminology.
• The selling was broad with only 14 members of the S&P 500 higher on the day. Major market indexes closed at their lows of the session.

China’s commerce ministry said Friday the country will impose a 34% levy on all U.S. products, disappointing investors who had hoped countries would negotiate with Trump before retaliating.

Technology stocks led the bleeding Friday. Shares of iPhone maker Apple slumped 7%, bringing its loss for the week to 13%. Artificial intelligence bellwether Nvidia pulled back 7% during the session, while Tesla fell 10%. All three companies have large exposure to China and are among the hardest hit from Beijing’s retaliatory duties.

Outside of tech, Boeing and Caterpillar — big exporters to China — led the Dow lower, falling 9% and nearly 6%, respectively.

“The bull market is dead, and it was destroyed by ideologues and self-inflicted wounds,” said Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners. “While the market may be close to the bottom in the short-term, we are concerned about the impact of a global trade-war on long-term economic growth.”

China’s efforts to respond to Trump’s tariffs extended beyond reciprocal duties of their own. Beijing added several companies to its so-called “unreliable entities list,” which asserts that the firms have broken market rules or contractual commitments. In addition, China opened an antitrust investigation into DuPont on Friday, sinking shares nearly 13%.

The 10-year Treasury yield fell back below 4% Friday as investors flooded into bonds for safety, pushing prices up and rates lower. The CBOE Volatility index, Wall Street’s fear gauge surged above 40, an extreme level seen only during rapid market declines.

Trump appeared to be steadfast in the face of the markets backlash to his tariff blitz announced Wednesday evening, posting on Truth Social Friday that his “policies will never change.”

“The fear now as we go into the weekend [is] the trade war escalates, and the US doesn’t back down,” said Jay Woods, chief global strategist at Freedom Capital Markets.

All told, the S&P 500 dropped 9% on the week, its worst week since the breakout of Covid in early 2020.

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:

 

A Solid Payroll Report Means the Fed Stays on the Sidelines


The economy created 228,000 jobs in May, well above the 140,000 that was expected by forecasters. Monthly numbers can be noisy (especially since some of the jobs created could be a rebound from lower-than-expected numbers after terrible weather January and February) and so let’s look at the three-month average. That’s running at 152,000, which should be more than enough to keep up with population growth, especially in the face of a big drop in immigration. Of course, that’s lower than the monthly average of 209,000 in the fourth quarter of 2024—so the labor market has certainly cooled.



The unemployment rate did tick up from 4.1% to 4.2%, but that’s a result of rounding. It actually moved from 4.14% to 4.15%. Let’s call that steady. The prime-age (25-54) employment population ratio, which I prefer to the unemployment rate since it gets around demographics (an aging population) and definitional issues around who is counted as “unemployed,” is now at 80.4%. That’s dropped from a peak of 80.9% last September. That’s concerning by itself, and more evidence that the labor market is cooling. At the same time, 80.4% matches the highest levels we saw between 2001 and February 2020, implying the labor market is still in an “ok” place overall (as long as the numbers don’t move lower). Note that this also means we don’t’ have a lot of workers “sitting on the sidelines” that can be employed to build all the new manufacturing facilities that will need to be reshored to America, let alone workers to make goods in them.



What ultimately matters for the economy is aggregate income growth, because that will determine how much capacity there is for spending. It’s a gauge of the speed limit of nominal GDP growth. Aggregate income growth is the product of:

• Employment growth, which is fairly solid at 1.3% year over year, but lower than the 1.5% pace we saw in 2019
• Wage growth, which is running at a 4.2% year-over-year pace, ahead of the 2019 run-rate of 3.4%
• Hours worked, which is where we were pre-pandemic

Aggregate income growth is up 4.4% year over year as of March 2025, and the three-month annualized pace is actually 4.9%. That’s in-line with the pre-pandemic pace of 4.5%.



This is all positive news, but it’s yesterday’s data. It tells you that the economy was in a reasonably good place going into a massive shock event, i.e. tariffs. It’s really hard to say what happens next.

As I wrote yesterday, the easiest way to think about tariffs is that it’s a tax increase for consumers and businesses—a big tax increase given the size of the tax cuts. The tariffs are going to create enormous distortion in consumption, and even investment data, over the next few months and we’re not going to be able to get a proper read on the economy. Meanwhile, we’re likely to see inflation data start to pick up after April and May, especially for durable goods like vehicles, as consumers rush to get ahead of tariffs. Businesses may also look to build up inventory at current low prices, which may result in a temporary boost in production. All this to say, the economic data over the next few months may be screwy and even likely to hide underlying weakness.

We’re also going into earnings season soon, but Q1 earnings are not going to mean much anymore, and I’m hard-pressed to think if a lot of companies are willing to give much guidance. At best, they’ll say they can weather the coming storm, but of course they’ll do that to avoid investors panicking and selling their shares.

The Economy Needs Support That Is Not Forthcoming
The president and his team are actively engaging in policy that is seeking to break how the global economy works, and re-tool it for long-term gain. But as I wrote in my prior blog, I’m unconvinced on the long-term gain part because of incompatible goals: generating more revenue for the US government versus re-shoring manufacturing versus liberalizing trade even further (as other countries drop all trade barriers). The way the tariff policy was constructed also leaves less room for negotiation. A country like South Korea already has near zero tariffs on US goods, and so what would the have to offer in a negotiation?

Congress is on the sidelines. Technically, tariff policy needs to be signed off by Congress, but that power has been eroded since the 1970s and ceded to the executive. They could buffer the blow to the economy with a fiscal package but right now the focus is simply on extending the tax cuts that are expiring at the end of this year. That’s positive, but all it does is remove another potential headwind, rather than adding a tailwind. If anything, Congress seems actively looking at options, including raising top tax rates, to avoid raising the deficit any further, a worthwhile long-term goal but not positive in terms of providing short-term support for the economy.

That leaves the Federal Reserve (Fed). As I mentioned above, inflation is likely to pick up on the back of higher prices for durable goods—both because consumers’ rush to get ahead of tariffs, and subsequently as a result of a tariffs themselves, assuming businesses chose to pass along higher input costs instead of reducing their margins. In theory, the tariff impact will be “transitory,” a one-time shift in the price level. But because of how households may adjust spending, how companies choose to raise prices and revise contracts, and how inflation data is constructed, we may actually see persistently higher inflation for a period of time, beyond just 3 – 4 months. For example, we could initially see new vehicle prices go up as consumers rush to buy, followed by a spike in used car prices as people avoid tariffed new vehicles, followed by increased auto-service costs including maintenance and repair, and insurance.

It’s going to be a big problem for the Fed, and Fed Chair Jerome Powell acknowledged as much on Friday morning. He said that that while uncertainty is elevated, it’s now clear that the tariff increases will be significantly larger than expected. He seemed less convinced that the impact will be transitory, saying:

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”

He added that they will be focused on making sure that a one-time increase in the price level does not become an ongoing problem.

Over the last year, the Fed had decidedly moved policy to favor an asymmetric response to employment vs inflation (their two mandates). With the inflation outlook looking stable, they could focus on protecting the labor market, which is why they dropped rates by 1%-point last year to preempt weakness in the labor market (the unemployment rate rose from 3.7% in January 2024 to 4.2% by August). But that asymmetry may be ending, more so because the labor market doesn’t look like it’s breaking down (yet), even as inflation is likely headed in the wrong direction.

In fact, Powell’s remarks sound like a central banker who is once again considering the option of raising rates to fight inflation. I don’t think the Fed will raise rates this year, but even if they don’t cut, that still leaves rates in meaningfully restrictive territory (using their own terminology to describe where policy is). That’s going to hurt the labor market, along with cyclical areas of the market like housing and manufacturing.

Interestingly, investors expect the Fed to cut policy rates all the way down to 3.3% by the end of 2025, 1.1%-points below where rates are currently (implying 4-5 cuts). Plus, they expect these cuts to come after the June Fed meeting. This means investors expect the Fed to slash rates in the back half of the year. Let’s be clear, it’s the market’s equivalent of thinking there will be a recession, with a big jump in the unemployment rate that the Fed will have no option but to respond to.

I don’t think it’s as clear cut as that. Core inflation could be headed back to 3.5% (it’s at 2.8% now, uncomfortably above the Fed’s 2% target) and it’s not a certainty that the labor market will collapse. We’re not seeing any signs of that, yet. In their March “dot plot,” Fed members expected the 2025 policy rate to end up at 3.9% (implying two cuts), with core inflation at 2.8% and the unemployment rate at 4.4%. It’ll be interesting to see where they put the dots at the next update in June. My guess is the projected rate for 2025 goes up, and projected core inflation and projected unemployment rate also goes up. That will not be positive for markets.



To summarize where we are as the economy faces a massive shock:

• The administration’s policies are actively looking to break how the global economy works, to retool for long-term gain (a very hard project to accomplish).
• The Fed is on the sidelines as they wait for data, and will likely only act after the labor market is breaking, and worse, they may even consider rate hikes if inflation stays persistent.
• Congress is on the sidelines, with no prospect of providing fiscal support. At best they extend the tax cuts, and that simply removes a headwind rather than providing a tailwind.
• Markets have significant concentration risk (towards the technology sector) and elevated valuations, which simply means there’s room for a bigger re-rating of expectations.
• The good news is that consumers and businesses are not leveraged to the hilt, but that lowers the odds of a big financial crisis, not the odds of a downturn spurred by retrenching.

Expect turbulence ahead. This is the time to have portfolios diversified as much as possible, without leaning too much one way or the other. Of course, markets pulling back is an opportunity to add more at lower prices, especially if you’re invested for the long term. But the long term is a series of short-term windows and you need to be sure that your risk allocation matches your tolerance for volatility, as we could see a lot of it in the months ahead.

The Tariffs Are a Big Deal and Risks Are Very High


Tariffs are here and in a big, big way, much bigger than anyone expected. And it isn’t really reciprocal tariffs. The calculation of tariffs is based on the trade deficit the US has with each country, and nothing to do with actual tariffs other countries charge on US goods.

For example, say a country exports $10 of goods to the US and imports $6 of goods from the US. That’s a trade deficit of $4 the US has with the country, i.e. 40% of their exports. Boom! They get charged a 40% “reciprocal” tariff to make things “fair”. BUT, the administration wants to be seen as lenient, and so they’ve halved that rate from 40% to 20%. Still, the minimum rate is 10%.

This calculation is why the island of Norfolk (population 2,188 and 1000 miles off the coast of Australia) got slapped with a 29% tariff – they export about $655,000 of goods to the US (mostly leather footwear). Meanwhile, Australia gets slapped with a 10% tariff.

The highest tariff rate imposed on any country is 50%, on goods from the tiny African nation of Lesotho (also one of the poorest). Lesotho imposes a tariff rate on US-made goods that is similar to other countries in the Southern African Customs Union (SACU). But Lesotho is charged 50%, whereas other members get hit with a lot less, including 30% for South Africa, 21% for Namibia, and 37% for Bostwana. That’s because Lesotho exported about $237 million of goods to the US in 2024 (mostly diamonds and Levi’s jeans), while they imported only about $7 million worth of products from the US (they can’t really afford to buy a lot of American products). As calculated, that’s (237-7)/237 = 97%, and halving that gets close to 50%.

South Korea, which has a free trade agreement with the US, and near 0% tariffs on US goods, gets hit with a 25% tariff. Meanwhile, serial tariff user, Brazil, just gets 10%.

China gets hit by a 34% tariff under this calculation, but that’s above the already announced 20% tariffs on Chinese goods – which means tariffs on China are now at 54%.

Then we also have tariffs on autos, steel and aluminum, along with upcoming tariffs on things like lumber and pharmaceuticals.

There’s Not Much Room for Negotiation Given US Goals
The bilateral deficit-based tariff calculation is going to make it hard to negotiate with the US. How do you reduce your tariff to zero if it’s practically zero already, as in South Korea’s case? You’d have to “promise” that the bilateral trade surplus with the US will fall to zero – but how do you do that without completely retooling your economy towards consumption instead of manufacturing. Even if it happens (which is very, very, very unlikely,) it’s going to take ages to actually happen.

This is the problem with focusing on bilateral trade. A country may have a surplus with the US but an overall trade deficit – how does it go about reducing its trade surplus with the US to zero without simultaneously adjusting trade with everyone else. Meanwhile everyone else is trying to do the same thing.

These tariffs are slated to go into effect on April 9th, which leaves barely a week for negotiations. And if other countries retaliate, as several have suggested they will, we could see the administration dial up these tariffs even more. Interestingly, China has been relatively quiet with respect to the tariff issue, with no meetings scheduled at least until June.

On top of that, the administration has also torn up USMCA, which President Trump himself touted as a great deal back in 2019 (USMCA replaced NAFTA). So, there is no certainty here that the US will stick to its end of any negotiated deal.

It also gets to the point that these tariffs have several incompatible goals. On one hand, the goal is to bring back manufacturing to the US – let’s be clear, this will happen by import substitution, i.e. making foreign goods much more expensive and forcing Americans to buy slightly less expensive US goods (but still more expensive than current prices). Keep in mind that this has major implications for household consumption, especially durable goods (like cars, furniture, appliances, TVs, etc) – the last 30 years, post NAFTA and China’s entry into the WTO in 1999, saw a steady pullback in durable goods prices, i.e. deflation (the chart shows the personal consumption expenditures index for durable goods). Covid broke that streak, as supply chains cracked – but over the last 2 years, it was looking like the downtrend in prices resumed. But now, the goal is to willfully break those same supply chains, which means we could be at end of an era of durable goods deflation.



On the other hand, another stated goal is to raise 100s of billions of $ of revenue (to perhaps pay for tax cuts), but in that case you don’t want import substitution and reshoring of manufacturing. Then you have the tech-adjacent folks close to the administration saying these tariffs are meant to be negotiated down so that globalization can happen on a “level playing field”, i.e. zero tariffs everywhere.

Uncertainty Is Going to Hurt, Whether or Not These Tariffs Are Kept in Place
Ultimately, we have no idea whether these tariffs will be permanent. And that’s going to be problem for businesses.

If you’re looking to build a plant to manufacture, say leather footwear in the US (perhaps taking away share from Norfolk Islands), what if the tariffs are removed a few months from now, or 3 years from now, and the previously calculated return on investment no longer makes sense. That’s going to reduce capital investment here in the US.

Real private nonresidential investment, i.e. business investment was already slowing in Q4 2024 before this shock. Companies sitting back without making investments is going to be a bigger drag on GDP going forward. Now, we did have a trade war in 2018-2019 and didn’t see a big collapse in business investment but we had two things going for it, 1) a huge corporate tax cut, and 2) a Federal Reserve (Fed) that started to reverse tight policy. That’s not the case today.



There’s also the problem of stranded assets for US companies. What do you do with a foreign plant now. Take the example of Nike, which has 500,000 people working in Vietnam, across 155 factories, even as high-value design is done here in the US. Does Nike reshore all their manufacturing facilities, and what do they do with the ones abroad? Moreover, who builds these factories here in the US (we likely don’t have enough construction workers), and where do we find half a million workers to manufacture sneakers, assuming that low value-add activity is something desirable to be reshored. Companies will be asking a lot of questions, to which there aren’t any clear answers.


A Shock That Could Leave the Fed on the Sidelines
The Budget Lab at Yale calculates that the US average tariff rate will rise to 22.5%, the highest since 1909. Even higher than the Smoot-Hawley tariffs signed into law by President Hoover in 1930.



To be clear, this is a massive shock to the economy – akin to a big tax increase on consumers and/or businesses (if they don’t pass the increased tariff cost to consumers) – we just don’t know how large and for how long.

My colleague, Associate Portfolio Manager, Blake Anderson, who manages equity portfolios and focuses especially on the Technology sector, says that Apple runs about 37% gross margins on its products, and 85-90% of production costs are Asia based. A 50% tariff on those products and the gross margins collapses to 5%. Which likely explains why Apple shares fell more than 8% on the day after Liberation Day. Of course, Apple could charge consumers more for iPhones, iPads, etc, but that runs the risk that they stop buying altogether.

In fact, a lot of companies in the traditional industrial heartland of America and even the Great Plains may be disproportionately impacted by the tariffs, and retaliatory tariffs – these areas still have a lot of manufacturing that rely on capital goods and intermediate inputs (including being a key part of the auto supply chain). And they also rely a lot on exports, including agricultural products, commodities, and even aerospace.

Over the last two years, we’ve repeatedly talked about the fact that manufacturing construction in the US has soared since the end of 2020 (by over 130% in inflation-adjusted terms). Ordinarily, we would now be expecting companies to purchase (and import) industrial equipment to for these factories, but they’re going to get big tariff slapped on it. In other words, it just got more expensive to build in the United States.

The massive tariffs may also paralyze the Fed as I discussed in my prior blog. Investors expect three to four interest rate cuts this year, but I’m not so sure. You would expect rate cuts in the face of a rising unemployment rate, which will occur if the tariff shock pushes hiring even lower and layoffs really surge as companies retrench. This could happen but the Fed may be paralyzed between a rise in inflation (albeit “transitory”) and reacting to a rising unemployment rate. Right now, investors are estimating a near zero chance of no rate cuts this year, but I think it’s a lot higher than that. Perhaps not as high as to be the base case, but not insignificant either. Even if the Fed cuts rates, they would be reacting to a rise in unemployment rate as opposed to taking preemptive action. In other words, they’re going to fall even further behind the curve on easing policy (and elevated rates are already hurting housing and manufacturing).

Now, long-term treasury interest rates have been falling for a couple of months now. Normally that would be a tailwind for areas like housing, via lower mortgage rates. But housing is also going to be buffeted by higher tariffs on inputs into the construction process, including lumber. And rates are falling for the wrong reasons, i.e. because investors expect slower economic growth in the future.

Economists in the administration have also said that the inflationary impact of the tariffs can be muted by a rising dollar. But that assumes that the US economy will continue to outperform the rest of the world and interest rates in the US will stay much higher than elsewhere (attracting flows into USD based assets). But markets are betting the opposite will happen – that growth will collapse, pushing the Fed to cut rates – and so the USD has actually fallen, including after the latest tariffs announcement. That’s going to make imports even more expensive.





What About Markets, and Portfolios?
With respect to markets in general, everything we’ve seen policy-wise over the last two decades has been to lower volatility- whether it’s the Fed stepping in with QE or rate cuts, or Congress and the White House sending out stimulus checks (that doesn’t mean they were successful every time, but the goal was to smooth over cracks that were forming – whether in markets or the economy). But policy right now is actively volatility-inducing. Administration officials have openly talked about “short-term pain” for “long-term gain”, with President Trump himself admitting that a transition period for the economy is likely, and that “you can’t really watch the stock market”. Treasury Secretary, Scott Bessent, said that the sell-off in stocks was due to a pullback in technology stocks, rather than protectionist policies “a Mag7 problem, not a MAGA problem”.

Of course, given the seemingly incompatible goals of these policies, as I described earlier, it’s hard to see a clear long-term gain right now. The risk of a recession over the next 12 months has increased quite significantly, but things are still very fluid.

All this has implications for portfolio construction and how different parts of the portfolio complement each other. For example, if inflation surprises to the upside over the next few months, the Fed may not cut, and we could see bonds failing to act as a diversifier to stocks. But you don’t want to throw out long-term bonds from a portfolio in case a recession materializes, and interest rates plunge. Low volatility stocks are another way to diversify portfolios – these are stocks that tend to outperform when markets are volatile.

Another thing to keep in mind is that the current account deficit for the US (which is mostly the trade deficit) is the other side of the capital account surplus, i.e. net inflows of capital into the US. It exactly balances out. Over the last 2 decades, those inflows of capital have mostly gone into portfolio investment rather than fixed direct investment (FDI), i.e. US debt (especially treasuries) and stocks. Mostly thanks to the outperformance of these assets over everything else. If the trade deficit disappears, the capital surplus has to also disappear as these things need to balance.

We just had one of the biggest economic policy announcements made by the US government in history, and the ramifications go beyond mere trade. It also has implications for flows of capital into various global assets, which could impact differential returns between all these assets.

Diversification has had a tough decade and a half, thanks to the U.S. stock market, led by technology stocks, outperforming by as much as they have. But now may be the time when a really diversified portfolio is crucial. That includes both equities and diversifiers, the stuff you expect to zig when stocks zag. You likely don’t want to be concentrated in any single side of the equity market, including just US equities, but instead diversifying globally to take advantage of lower correlations between US and International stocks. If the dollar continues to pull back, as other countries reduce trade with the US, that will be a potential tailwind for international stocks. On the diversifiers side, as we’ve consistently been saying, you want to diversify your diversifiers, across cash, bonds, commodities, managed futures, and even low volatility stocks (as I mentioned above) – given all the uncertainty, it’s hard to say which one zigs when stocks zag. The good news is that there are myriad ways to create a well-diversified portfolio right now, in a cheap way, much more so than 20 years ago, or even 10 years ago.

Post-Election Year Woes Persist

There’s no way to sugarcoat it, unless the market can get back into the green for the year in April, our more bullish base case scenario for 8-12% gains for 2025 becomes harder to achieve. Currently, the S&P 500 is tracking the weaker post-election patterns of republican administrations and after incumbent party losses. This action has increased the odds of our annual forecast worst case scenario.

2025 is tracking the old school weak republican president post-election year performance noted on page 28, Stock Trader’s Almanac 2025. The market is concerned Trump 2.0 and Congress may be implementing too many drastic measures, which tends to lead to flat to negative full-year performance. Unless the market can rebound substantially next month, we are likely in store for some tough sledding through the third quarter.

Down Q1 Can Lead to More Trouble

This is no April Fool’s joke. Adding to our concerns that the market in 2025 continues to track less bullish post-election year scenarios is the history of market performance following down first quarters, especially in post-election years. First the good news. April has been up on average and about 63% of the time. Q4 has been even stronger. Though both April and Q4 have taken some hits as well.

But unfortunately, Q2 and Q3 have been weak overall and Q3 especially in post-election years. Most compelling is that if the market had already achieved bear market levels when Q1 was down it was usually near a bottom or low point from which the market rallied substantially. Conversely, if Q1 is negative and the market has not reached bear market status or is not far from a recent all-time high, then we have more often than not experienced further market trouble and downside action over the subsequent nine months.

Several of the weak republican post-election years discussed on page 28 of the 2025 Almanac also standout: 1953, 1957, 1969, 1973, 1981 as well as 1977, Jimmy Carter’s difficult first year. There are several other non-post-election years of concern, most recently 2022. The most impressive turnarounds from down Q1s occurred at or near the ends of bear markets in 1980, 1982, 2003, 2009 and 2020 after Covid-19 induced the shortest bear market on record.

Waving Goodbye to A Tariff-ible Quarter


“It is uncertainty, far more than disaster, that unnerves and weakens markets.” -John Steele Gordon, American writer

After serious consideration, we’ve decided to move all of our portfolios into Godiva Chocolate Cheesecake at The Cheesecake Factory, because if you’ve ever had one then you know. Now that I have your attention, April Fool’s Day!

Now to your regularly scheduled blog.

After what began as a nice start to the year with a green January, the S&P 500 fell in both February and March. In fact, it lost 5.8% in March for the worst March since 2020 and second worst March the past 24 years. Dominating the weakness was continued worries over tariffs and potential uncertainty surrounding trade policy. Remember, markets can go up on good or bad news—it is uncertainty they don’t like and we saw that in a big way last month. The quote above from John Steele Gordon is one of my favorites on this topic.

Was This Really a Surprise?
No, we didn’t expect stocks to be this weak to start the year, but below is a chart we’ve shared many times and it shows that the first quarter of a post-election year tends to be quite weak historically. In fact, it is one of the worst quarters during the entire four-year Presidential cycle. Add in the facts (as we’ve discussed before) that early after a 20% year has been weak historically and so has the first quarter in general the past 20 years, and maybe this weakness isn’t as surprising as it might seem. The good news is the second quarter tends to do better in a post-election year.



The Decline Isn’t as Broad Based as You Might Think
Yes, the S&P 500 is down close to 5% after the first quarter, but this is greatly skewed by weakness in the technology and consumer discretionary sectors. In fact, seven sectors are up on the year, two are virtually flat, and only two are down. In total, nine of them are outperforming the S&P 500 so far this year. Toss in the fact that bonds are up a little bit, gold is soaring, and many stock markets around the globe are firmly in the green this year and it has been a nice year for a diversified portfolio. Of course, if you were heavily in the Mag 7 then this year hasn’t been very fun.



Some Good News for April
March wasn’t a good month and we clearly didn’t expect the second worst month of March over the past 24 years this time a month ago. But some good news is that after the worst ten Marches ever, April bounced back with gains in eight of them with some very solid returns.



Speaking of April, it was lower last year, but it hasn’t been lower in back-to-back years in 20 years. Since 1950 it is the second best month, the past 20 years the third best month, the past decade the fourth best month, and the second best month in post-election years. No, you should never blindly invest in seasonality, but this could bode well for the bulls.



Now the Bad News
A weak first quarter could be a warning sign for more weakness over the rest of the year. Looking at the 15 worst first quarters ever we found that the rest of the year was up only a median of 3.0% and up about a coin flip, much worse than all years since 1950. It isn’t all bad though, as April does better after a weak first quarter at least. Still, we’d put this in the potential worries camp.



Yes, the worries are growing and uncertainty is high, but we remain optimistic the economy will avoid a recession and stocks can come back nicely before this year is over. But enough about that. I’m writing this from beautiful Bryce Canyon in Utah while on Spring Break with my family. All I can say is you need to come here once in your life. It is unlike anywhere else in the world. Here’s me in front of the iconic Thor’s Hammer. Thanks for reading!

DJIA and S&P 500 Best on First Trading Day of Q2 Last 35 Years

When compared to the last day of Q1, the first trading day of Q2/April has favored DJIA and S&P 500. Since 1990, DJIA is up 23 of 35 with an average gain of 0.18% and S&P is up 22 of 35 with an average gain of 0.12% while NASDAQ is up 19 of 35 with an average loss of –0.20% and Russell 2000 is down 18 of 35 with an average loss of –0.26%.

From 1995 to 2012, the first day of Q1 was even stronger with DJIA and both S&P 500 up 15 times in 18 years however, since 2013 the day has become mixed. It would appear that stormy March markets have been spilling over into Q2 and April. Tariff uncertainty is at a fever pace and could easily derail any historical trends in early April.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 4.4.25-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 4.4.25-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for April 4th, 2025
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 4/6/25
Video from ShadowTrader Peter Reznicek

 

StocksForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StocksForums Weekly Stock Picking Contest & SPX Sentiment Poll (4/7-4/11) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($JPM $TLRY $BLK $LEVI $WBA $DAL $PLAY $STZ $WFC $KMX $BK $MS $CALM $MAMA $GBX $AEHR $RPM $BYRN $SMPL $LAKE $WDFC $KRUS $LOVE $FAST $NEOG $PSMT $RELL $BSVN $NTIC $THTX $TBBB $KRMN)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning April 7th, 2025 <-- click there to view!

 

Top of the morning StocksForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Monday, April the 7th, 2025!

 

Here are today's economic calendar events:

 

Here are today's analyst stock upgrades & downgrades:

 

Here are this morning's pre-market earnings results:

 

Morning Lineup - 4/7/25 - More Pain
Mon, Apr 7, 2025

Futures are sharply lower again this morning, although off their overnight lows, as investors look for signs of a break in the selling vortex. You’ll hear all sorts of opinions as to when and where the market will bottom out, but they’re all guesses, so ignore them. No one knows at this point. You could make the argument that President Trump can end this as fast as he started it, but that’s not guaranteed either. The longer markets remain in their current state, the more control he loses as other issues and factors start to pop up, and the more likely it is that this decline stretches out into a more prolonged decline. What’s that old Warren Buffett quote about what happens when the tide goes out?

How bad have things gotten? Just now on CNBC, there was an interview with a former Federal Reserve official and two topics of conversation were whether we were entering another Smoot-Hawley-type era and if the dollar had the potential to lose its reserve currency status. In the past, bringing up either of these issues would get you laughed off the set, and now they’re both legitimate topics to bring up, from a former Federal Reserve official no less!

The one thing the President has working for him is that foreign markets are starting to feel just as much, if not, more pain than the US. The day after the tariff announcements on Wednesday, US markets significantly underperformed foreign markets, but on Friday, the declines were more equally distributed. Today, at least so far, it is foreign markets that are generally feeling the most pressure. The more foreign markets underperform the US, the more likely it is that foreign countries come to the bargaining table. On the other hand, seeing foreign stocks underperform could only embolden the President more.

Futures are currently down around 2%, so we wanted to provide an update on where this decline stands relative to history. At current levels, the S&P 500 would be down 12.85% over a three-trading day span, which ranks up there as among the worst since late 1952 when the five trading day week in its current form started. At these levels, the decline is right around the worst of the three-day declines experienced during Covid and the Financial Crisis, and the only one that was meaningfully worse was the 1987 crash. This is a decline of historical proportions.



The chart below shows every prior three-day decline of 10%+ with a red dot. Outside of the three periods mentioned above, the only two others were in 1998 (Russia's Debt Default) and 2011 (US debt downgrade). One period that didn’t make the cut was the 9/11 attacks. In the four trading days when the market re-opened after those attacks, the S&P 500 declined around 12%, but it never reached a double-digit percentage decline in three days.



Given the market is coming off one of its worst two-day declines in history, you wouldn’t expect to see many stocks on the list of winners from Thursday and Friday, but we were surprised to see that not a single stock in the S&P 500 was up on both Thursday and Friday of last week.



On Thursday, 95 stocks in the S&P 500 finished higher on the day as investors tried to initially distinguish between winners and losers from Liberation Day, but Friday was more about investors coming to the realization that there wouldn’t be much in the way of winners from Trump’s plans. As shown in the table below, of the 34 stocks that traded 2%+ higher on Thursday, they were all primarily defensive in nature and names you turn to when you’re expecting a market or economic decline.



On Friday, just 14 stocks in the S&P 500 finished the day higher. 11 of them were from the Consumer Discretionary sector, and eight were either homebuilders or related to the housing sector. While these stocks traded higher on Friday, they have all been weak for months now, and the one-day rally was a bounce in reaction to the yield on the 10-year which plunged below 4%. Other winners included Lululemon (LULU), Nike (NKE), Target (TGT), and Dollar Tree (DLTR) which all fell 10% or more on Thursday in their immediate reaction to Liberation Day.



Turning back to the market macro, not even considering today’s weakness, the S&P 500 and most sectors all had their worst two-day periods since March 2020 last week. Think back to the way you felt in the Spring of 2020. While the two periods are incredibly similar in terms of the rampant levels of uncertainty, the causes of the uncertainty came from very different directions. In March 2020, people had no idea how Covid would impact the economy, how long it would last, or how to control it. Today, the cause of the uncertainty is incredibly under control and could be turned off just as fast as it was turned on. Whether that happens before it’s too late is the biggest question mark, and financial markets increasingly view the switch being turned off or at least dialed back as unlikely.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, April 7th, 2025.

 

Top of the morning StocksForumers! Happy Tuesday to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Tuesday, April the 8th, 2025!