Weekly Market Update for April 17, 2025
Equity markets felt a bit calmer this week despite ending lower. The S&P 500 declined -1.5%, while the Nasdaq fell -2.6%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.33%, down -16 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended unchanged at 4.20%. Good quarterly results from the banks, along with some interest rate stabilization and a retreat in volatility, led to a bounce in Preferred securities.
Consumer data improved somewhat. March retail sales came in above forecasts and accelerated versus February. In the face of declining consumer sentiment, the big banks noted that consumers aren’t yet showing signs of stress. As the Wall Street Journal put it: “Americans say they are getting worried about the economy and inflation, but banks say they aren’t acting like it yet.” And notwithstanding the major banks warning of risks that new tariffs present, most released strong earnings reports with robust 2025 outlooks.
On the tariff front, there were tailwinds and headwinds this week. Tailwinds included a geographically broad exemption for certain electronics (including smartphones & laptops) announced last weekend, along with relief for some imported vehicles and parts, as well as progress in Wednesday’s trade talks with Japan. Headwinds included restrictions on certain semiconductor exports, commentary around potential new targeted tariffs on semiconductors and pharmaceuticals, and minimal progress in trade talks with the EU. One angle of the administration’s tariff strategy seems to be attempting to strike trade deals that further isolate China’s economy.
In equity portfolio news, UnitedHealth’s first quarter results disappointed, with the insurer lowering its 2025 profit expectations by 12%. UNH attributed this miss to other insurers not appropriately diagnosing members who switched to United this year, as well as difficulties navigating Medicare Advantage regulation changes. Charles Schwab posted a strong start to the new year, demonstrating improved asset growth, reduced need for short-term funding, and favorable guidance. Lastly, as relations with China keep escalating, the US government handed down new export restrictions on Nvidia’s H20 chips (tailored for the Chinese market), causing a $5.5 billion hit to Nvidia. This surprise came just after the company announced on Monday the intention to invest $500 billion over the next four years in boosting their US manufacturing capability. The stock ended the week down 8.5%.
Our office is closed tomorrow for the Good Friday holiday. Next week, earnings reports are expected from Tesla on Tuesday and Google on Thursday, amongst a host of other companies. It will be fairly quiet from economic data points, with an April manufacturing report on Wednesday and additional housing data mid-week. Investors will stay glued to progress on tariff talks and any new trade developments.
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