Weekly Capital Markets Update

Global equity markets finished lower for the week. In the U.S., the S&P 500 Index closed the week at a level of 5,074, representing a decline of -9.05%, while the Russell Midcap Index moved -9.52% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned -9.64% over the week. Developed international equity markets and emerging markets also declined, returning -6.89% and -2.90%, respectively.

Last week, the U.S. stock market and economy faced a turbulent storm triggered by President Donald Trump’s sweeping tariff announcement on April 2, 2025. Dubbed “Liberation Day,” the announced tariff policy imposed a minimum 10% tariff on all imports, with steeper rates targeting countries like China and the European Union (EU). Markets reacted swiftly and brutally. On Thursday, the S&P 500 plummeted nearly 5%, erasing $2 trillion in value, while the Dow dropped 1,700 points—its worst day since 2020. The Nasdaq wasn’t spared, sliding into bear market territory by week’s end, down over 20% from its peak.

Friday’s carnage continued as China retaliated with a 34% tariff on U.S. goods, intensifying global trade war fears. The S&P 500 lost another 6%, closing at 5,074.08, and the Dow Jones Industrial Average shed 2,200 points. Over two days, U.S. equities declined by a total of $6.6. Investors fled to safe havens like bonds and the yen, while the dollar weakened 1.5%. Oil prices tanked below $60 a barrel, reflecting recession worries.
Economists also sounded alarms following the tariffs announcement. For example, JPMorgan pegged the U.S. recession risk at 60%, up from 40% prior to the tariffs announcement, citing disrupted supply chains and a potential 2% cut to gross domestic product (GDP). Goldman Sachs also raised its odds of a recession to 45%. Despite a surprisingly strong March jobs report—228,000 jobs added versus 140,000 expected—the data was overshadowed by trade tensions. Trump downplayed the chaos, calling it “medicine” for long-term growth, but Wall Street wasn’t buying it.

Volatility also spiked last week, with the VIX fear gauge jumping, and global markets followed suit as Japan’s Nikkei, for example, fell 8%. Corporate America braced for profit hits, especially firms reliant on international trade. The Federal Reserve even hinted at possible rate cuts to cushion the blow, but uncertainty reigns. For now, Trump’s tariff gamble has turned “Liberation Day” into a market meltdown, leaving investors and the economy on edge.

This type of stock market volatility can understandably be unsettling. However, we would remind investors that markets have weathered many storms before – enduring corrections, bear markets, and sell-offs. History shows that staying the course, rather than reacting to daily noise, tends to reward patience, discipline, and perspective often.

Best wishes to all for the week ahead!

Equity and Fixed Income Index returns sourced from Bloomberg on 4/4/25. Jobs Data sourced from the Bureau of Labor Statistics on 4/4/2025. Economic Calendar Data from Econoday as of 4/7/25. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.

Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.