Market Update: April 4th, 2025
Global equities declined again today following China’s announcement of retaliatory tariffs on U.S. imports. This escalation signals the early stages of what could become a prolonged trade conflict, potentially positioning the United States against key global economic partners.
Tariffs, which are effectively taxes on imported goods, tend to increase costs for consumers. Federal Reserve Chair Jerome Powell recently warned that these measures could contribute to higher inflation and slower economic growth, as he adopted a more cautious tone regarding the U.S. economic outlook.
Major equity indices, both domestic and international, fell between 5% and 6% today, adding to similar losses from the previous session. The S&P 500 has now declined more than 15% from its February peak.
Meanwhile, bonds saw modest gains as interest rates continued to decline, signaling concerns about a possible economic slowdown. The yield on the 10-year U.S. Treasury fell below 4% today, down from a January peak of 4.8%.
One unusual aspect of the current market environment is the simultaneous decline of the U.S. dollar. Historically, the dollar tends to strengthen during periods of market stress, as it is viewed as a safe haven. This unexpected move challenges prior assumptions made by some economic advisors who believed tariffs would strengthen the dollar and offset inflationary pressures. Some analysts interpret the dollar’s weakness as a sign of growing recession fears, while others suggest it may indicate deeper concerns about the long-term strength and stability of the U.S. economy.
During times of heightened volatility, such as we’ve seen over the past two days, it is rarely prudent to make immediate portfolio changes. Markets can behave irrationally, particularly when uncertainty is driven by geopolitical developments that may reverse or evolve. In these situations, it’s often wise to allow the volatility to settle before making long-term investment decisions.
As always, we remain focused on your financial goals and committed to navigating market fluctuations with discipline and perspective.