STOCK MARKET RECAP APRIL 2025

The month of April has been one of the most volatile periods ever in the stock market. The tariff confusion has accelerated the downward trend and has led to some erratic daily price moves.  As of Friday April 18th, the S&P 500 is 14.2% below its February peak. The Nasdaq is down 18.9% and the Russell 2000 has dropped 17.6%.

The daily swings in both directions have been extreme. We have seen eight daily moves in the S&P 500 greater than 2% in just the last three weeks.  The volatility has continued this week as rumors of the Administration backing off the tariffs have been floated.

The financial markets and the big corporations have been exerting a lot of pressure on the Administration to make changes to their tariff policies. The financial markets have been also exerting pressure on the Administration to back off from removing Chairman Powell from the Fed.  At the end of the day, money talks in our world and the big money players will continue to lobby for policies that are beneficial to the financial markets. 

Markets hate uncertainty and uncertainty is all we have had recently. 

Financial markets are very sensitive to the kinds of policy changes that have been introduced over the last couple of months.  Financial markets can react in unanticipated ways to all of these changes.  Volatility in the bond market and the value of the US dollar caught the Administration by surprise and seem to have tempered the policy changes. 

Hopefully, the moderation of the policy changes can limit the damage, but it may prove difficult to control the damage unleashed on the global markets.  The reaction of the stock market this week seems to indicate that investors believe that the damage has been contained. 

Unfortunately, the volatility will continue until we see more clarity on the Administration’s policies. I believe that the big money players will be successful in their efforts to limit the damage, but it is unclear how long this may take.

Investing is hard enough, but it is almost impossible when market moves are being dictated by rumors and tweets. 

We will continue to ignore our emotions and stick to what our models are telling us.  Trying to anticipate and predict the wild swings in policy is impossible and playing that game will lead to problems.  It can be painful to stay committed to your long-term strategy at times like this, but it is important.  Stay disciplined and follow your long-term strategy despite the recent volatility.

Stay Disciplined My Friends,

Phil

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