Market Recap – Tuesday, April 8, 2025
US Equities Struggle Amid Trade Uncertainty
US equities ended sharply lower today, with the S&P 500 marking its fourth consecutive session of declines and hitting its lowest close since February 24. The Nasdaq dropped 24% from its December peak, and the Russell 2000 entered bear market territory. The volatility was driven by continued fears over tariffs and economic slowdown. While some sectors like managed care and moneycenter banks outperformed, the broader market faced significant pressure from big tech, energy, homebuilders, and consumer-related sectors. The VIX surged above 50, highlighting the heightened market uncertainty.
Trade Tensions and Tariff Impact
The White House confirmed that a 104% tariff on China would go into effect on April 9, after China failed to remove its 34% retaliatory duties on US goods. This escalation of the trade conflict fueled fears of further economic disruption. Despite mixed messaging from the Trump administration, with some officials suggesting a willingness to negotiate, the market remains jittery, unsure about the long-term goals of the trade policy. Treasury Secretary Bessent emphasized the importance of negotiations and downplayed the market impact, while China has vowed to retaliate.
Economic Data and Fed Commentary
Economic data today showed a sharp decline in NFIB small business sentiment, which fell by 3.3 points in March, reflecting concerns over the impact of new policy priorities and tariffs. The Fed's commentary remained cautious, with both Governor Kugler and SF Fed President Daly noting concerns about the inflationary effects of tariffs, though they also emphasized that the Fed's policy was well-positioned to proceed slowly.
Sector Movements and Corporate News
In terms of sector performance, managed care stocks surged following news of increased Medicare reimbursements for 2026. The broader market saw sharp declines, particularly in stocks sensitive to tariffs and trade disruptions, such as Caterpillar and Signet Jewelers. Meanwhile, companies like Broadcom and CVS Health posted gains, driven by shareholder returns and positive news on government reimbursements.
Here’s Our Take
The market is navigating a volatile period driven by escalating trade tensions and tariff uncertainty. With significant downside risk in the tech and consumer sectors, investors may want to consider reducing exposure to these areas, particularly in the face of rising tariff-related inflation. Meanwhile, defensive sectors such as healthcare and insurance may offer relative stability.
As the trade war intensifies and economic growth concerns linger, maintaining a diversified portfolio and keeping an eye on potential policy changes is critical. For those looking for more stability, sectors like managed care, utilities, and real estate may outperform in the current environment. Given the heightened risk, it may be prudent to remain cautious in the short term and wait for further clarity on trade negotiations and Fed policy before making large portfolio adjustments.