Market Update: Week 15: April 7–11, 2025
- gordon7515
- Apr 14
- 2 min read
Updated: Apr 16
As you know, stocks plunged the week before when the White House announced new tariffs on trade partners. On Monday and Tuesday, however, there were small rallies despite investors' prevailing concern regarding the state of the global economy.
Stocks closed Monday up 0.2%, the first green day since the sell-off started the prior Thursday. Tuesday started with a much stronger push, opening up almost 4%. The rally would be short-lived, however, with the market taking back all those gains by day's end.
Relief came on Wednesday after the White House announced a 90-day pause on most of the new tariffs it announced the week before (except for China). This sent stocks skyrocketing, closing the day up a whopping 9.5%.
The market then rallied until the end of the week, hoping that a deal with China would be reached soon.
Overall, health services, technology services, and retail trade performed the best, while energy minerals, health technology, and process industries lagged.
(Source: Fidelity.com)
Thought of the week
Last week’s erratic market moves were disorienting. On Tuesday, the S&P 500 closed out its worst four-day stretch since the pandemic, falling over 12% after the administration announced tariffs that exceeded market expectations. Shortly after, news that these tariffs would be suspended for most countries fueled a 9.5% market rally, the largest one-day gain since 2008. Volatility wasn’t confined to just equities. 10-year yields fell 19 bps due to increased growth fears after the tariff announcement, only to finish last week 47 bps higher.
Investors may feel compelled to wait out market volatility in cash. However, this tends to be a losing strategy. This week’s chart analyzes returns for a diversified 60/40 stock/bond portfolio over different rolling periods since 1995, covering the Dot-Com Bubble, the Great Financial Crisis, the COVID-19 Pandemic, and other periods of heightened volatility. History shows that, despite these periods of stress, the diversified portfolio dependably outperforms cash, with the likelihood of outperformance rising with the investment horizon. The 60/40 has beaten cash in 64% of all rolling 1-month periods, 91% of all 10-year periods, and 100% of all periods of 13 years or longer. It is equally important to recognize that markets have always recovered from significant downturns. In fact, the diversified portfolio has never finished a rolling period of 10 years or longer in the red.
When uncertainty is driving markets, investors must remember the basics. Diversification is critical, as bonds help diversify equity exposure against growth shocks. Investors should also get invested and stay invested. While the S&P 500 is down ~13% from its February peaks, which feels painful, long-term portfolios will recover with time. Moreover, investors who invest actively can use sell-offs to gain exposure to quality companies at attractive valuations and lock in attractive yields and portfolio protection.
(Source: JP Morgan)
All the Best,
Gordon Achtermann, CFP®, CSRIC®, MBA
703-573-7325
8280 Willow Oaks Corporate Drive, Suite 600
Fairfax, VA 22031
We provide comprehensive financial planning and wealth management services to clients in Virginia, Maryland, and nationwide.
