Market Recap – Tuesday, April 15, 2025
US Equities Close Mostly Lower Amid Tariff Concerns and Mixed Economic Data
US equities finished mostly lower on Tuesday, though stocks improved through the afternoon after some early softness. The Dow closed down 0.38%, the S&P 500 dropped 0.17%, and the Nasdaq fell 0.05%, while the Russell 2000 gained 0.11%. Outperformers today included sectors such as banks, airlines, asset managers, and semiconductors, while big tech underperformed, with notable declines in companies like Microsoft and Apple. Laggards included chemicals, food, apparel retailers, and refiners.
Trade Policy and Inflation Concerns: The market's performance continues to be heavily influenced by trade developments. The White House has launched national security probes into pharmaceuticals and semiconductors, with potential new tariffs on the horizon. However, the market remains focused on potential off-ramps, such as the temporary tariff exemptions on electronics and Trump's comments regarding potential relief for the auto sector. Meanwhile, US-China tensions remained high, with Beijing increasing its tariff rate on US goods to 125%.
Economic Data: The April Empire State Manufacturing Index showed a slight improvement, climbing to -8.1, better than the consensus estimate of -14.5. However, the survey indicated continued pessimism, with firms expecting future business conditions to worsen. The data also highlighted rising input and selling prices, indicating persistent inflationary pressures. Meanwhile, the March import prices were slightly below expectations, falling by 0.1%.
Corporate Earnings Updates: Bank earnings season is underway, with positive results from Bank of America and Citigroup, driven by strong fee income and credit performance. On the downside, companies like ACI (Albertsons) and DOW (Dow, Inc.) reported weaker-than-expected guidance, partially due to tariff uncertainties. Elsewhere, Netflix revealed aggressive plans to grow its market cap to $1 trillion by 2030, while Amazon's CEO expects higher tariffs to impact costs for consumers.
Here’s Our Take
While the relief rally from recent tariff exemptions offered some support, the outlook remains uncertain due to ongoing trade tensions, the potential for new tariffs, and inflationary pressures. Investors should stay cautious, particularly with the potential for further tariff hikes and economic slowdowns. Earnings results so far suggest that the macroeconomic backdrop is weighing on corporate outlooks, with companies in the consumer, tech, and manufacturing sectors being especially vulnerable to trade policy uncertainty. As earnings season unfolds, market volatility is likely to persist, with positioning dynamics playing a key role in short-term movements. For long-term investors, it’s crucial to focus on companies with solid fundamentals that can weather trade policy uncertainty and rising inflation pressures.