Market Recap – Friday, April 25, 2025
US Equities Close Mostly Higher
Stocks closed mostly higher today, with the S&P 500 gaining 0.74% and the Nasdaq rising 1.26%, continuing a strong week for markets. The Dow ended slightly up by 0.05%, while the Russell 2000 remained flat. Big tech stocks were a key contributor to the positive session, with Tesla (TSLA) being the notable gainer. Semiconductors, software, communications, and industrial sectors also saw strong performance. On the downside, sectors such as managed care, insurance, regional banks, and airlines lagged. Treasuries closed firmer, with yields down by 6-8 basis points, and gold saw a decline of 1.5%.
Trade Developments and Geopolitical Risks
Trade headlines continued to provide some support for equities, though the messaging remained mixed. President Trump made remarks indicating a willingness to de-escalate tensions with China, but also reiterated that tariffs would not be reduced unless China makes significant concessions. The market was buoyed by speculation around potential agreements with other countries like South Korea and India. However, the overall trade environment remains volatile, with some products expected to be exempted from Chinese tariffs, while ongoing uncertainty persists.
Economic Data and Consumer Sentiment
April’s final University of Michigan Consumer Sentiment came in stronger than expected, though still reflecting the weakest levels since July 2022. Inflation expectations for the next year were slightly reduced to 6.5%, still well above historical averages. Data for March durable goods orders showed a 9.2% month-over-month increase, led by strong transportation demand, while core capital goods orders came in below expectations. New home sales also exceeded expectations, though the broader housing market remains under pressure.
Fed Comments and Economic Outlook
The Fed’s Beige Book reported little change in economic activity, with uncertainty around trade policies continuing to weigh on sentiment. Job growth remained stable, but concerns about inflationary pressures persisted. Federal Reserve Governor Waller and others indicated that the central bank will remain patient but could move to cut rates if clearer economic signals emerge in the coming months.
Here’s Our Take
Trade Uncertainty and Tariff Mitigation
With continued trade uncertainties, particularly around US-China tensions, and the potential for global recession risks to increase, the investment environment remains mixed. Companies are increasingly focused on mitigating tariff impacts, with supply chain optimization and pricing strategies becoming key themes in earnings calls. While some sectors have performed well in Q1, uncertainty in consumer spending and macroeconomic conditions suggests a more cautious outlook for the near-term.
Sector-Specific Strategies
Investors should continue to focus on sectors that are less exposed to trade risks, such as technology, AI, and cloud computing, which are benefiting from structural growth. Companies like Alphabet (GOOGL) and Tesla (TSLA) have capitalized on AI trends and remain attractive in the long term. However, in the consumer-facing sectors, there may be volatility, and investors should be prepared for some short-term fluctuations as trade policies and economic uncertainty evolve.
Next Week’s Economic and Earnings Calendar
Looking ahead, next week will bring key economic data, including Q1 GDP, core PCE inflation, and the April jobs report. Earnings season continues with notable reports from major tech and industrial firms, and investors will be looking for signs of tariff mitigation and broader economic resilience.