Weekly Market Insights | Investors React to Tariff News

Stocks moved lower last week as investors swung from exuberance to disappointment on news over tariffs and inflation. The Standard & Poor’s 500 Index fell 1.53 percent, while the Nasdaq Composite Index retreated 2.59 percent. The Dow Jones Industrial Average slid 0.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.29 percent.^1,2

An Up and Down Week
Stocks started the week with a sharp rally after the White House said it may “give a lot of countries breaks” on reciprocal tariffs. The positive momentum continued into Tuesday, with the Nasdaq and S&P 500 outpacing the Dow.³

Then, midweek, news that the White House was planning additional tariffs on all cars made outside the U.S. rattled markets.^4,5 On Friday, investors reacted to a warmer-than-expected inflation report and lower consumer sentiment, putting further pressure on stocks as the week closed.⁶

_{The S&P 500 just suffered its 6th fastest 10% plus correction in the last 75 years-falling more than 10% in just 22 trading days. The key question is whether this sharp pullback is a healthy correction that sets the stage for a rebound, or the start of a deeper downturn associated with an approaching US recession. History shows that the presence (or absence) of a recession is the decisive factor in post-correction paths.} 

_{The consumer limped into 2025 as the curtain of deception and corruption is now being lifted by DOGE while the declining health of US consumers worsens with credit card rates and delinquencies at record heights, car repossessions rising, increased mortgage delinquencies, rental defaults and rental and mortgage applications being denied at a rising rate. The US is a consumer-driven-economy and the large government fat pruning will also negatively affect consumption, which is being reflected in declining consumer confidence and declining sentiment.  The hit to consumer confidence could be a bigger effect than the tariffs themselves, which served to amplify the sense of market and economic uncertainty on Wall Street, and stocks are now trending lower amid the barrage of market-negative headlines by the ghouls in the media. Investor sentiment is shockingly low and advisor sentiment is now consistently sitting at levels last seen in the fall of 2022.} 

_{As a former 5 Star rated Morningstar institutional money manager on a 40 Act hedge fund type mutual fund, my concerns is the Dow Theory just turned bearish with the Dow Jones Industrial Average (DJIA) notching a significant lower low on the weekly timeframe charts, following the establishment of a lower high in late-January/early-February. The series of new low extremes in the DJIA occurred shortly after the Dow Jones Transportation Average (DJT) completed the same pattern of lower extremes (lower highs followed by lower lows), just weeks prior in late February.}

_{A bearish reversal in Dow Theory effectively means that the bull market coming off the October 2022 lows has either ended or is in the process of ending. It is worth noting that Dow Theory is not known for being early to call a market reversal at lasting highs or lows, but instead is a time-tested investment signal system that is understood to provide a relatively high conviction bullish or bearish call for the primary trend in the stock market once a reversal is confirmed.}

_{In practice that means that investors following the system signals typically enjoy participating in the majority of a primary up trend during periods of economic expansion, and also take comfort in knowing that, historically speaking, bearish signals will help them avoid a significant portion of equity market downturns during periods of economic contractions. The recent bearish reversal in Dow Theory is not something to dismiss as another sensational and over-hyped technical signal like a Hindenburg Omen or Death Cross, because it has a proven history of effective long-term trend identification. That is especially true given the cycle risks the market is currently facing based on some of the most historically accurate, market-based economic signals including the yield curve.}

_{To be clear, the broader market has reached new highs after a bearish Dow Theory signal in the past, just not frequently, so a renewed push to fresh record highs is by no means out of the question. Instead, Dow Theory is simply signaling that downside risks are growing. On the other hand, we cannot disregard the enormous benefits of the major advancements in many technologies such as AI, quantum computing and the digital age – stay tuned as all these cross currents play out with a global macro environment that continues to fan the flames of uncertainty.} 

_{Gold (XAU/USD): Gold prices continued their upward trajectory, closing the week at approximately $3,055.60 per ounce, marking a 1.1% increase from the previous week. This surge is attributed to escalating geopolitical tensions and recent U.S. import tariffs, prompting investors to seek safe-haven assets. The trend in gold remains decidedly bullish, but given the solid YTD gains it remains susceptible to potent profit-taking pullback.}

_{Oil (WTI Crude): WTI crude oil maintained its strength, ending the week near $69.20 per barrel, achieving a 2% weekly gain. The rise is driven by concerns over tightening supply due to U.S. sanctions affecting Venezuelan and Iranian oil exports, coupled with a larger-than-expected drawdown in U.S. crude inventories. Oil is enjoying a counter trend rally off the 52-week lows established earlier in 2025, which notably did not see any downside follow through much beyond $65 a barrel. As such, the technical setup is improving for the prospects of a further near-term price advance but fundamentals continued to favor the bears long term thanks to broad global economic uncertainty.}

_{Cryptocurrency (Bitcoin): Bitcoin experienced volatility throughout the week but concluded with a modest increase, closing at approximately $86,760, up 0.5% from the prior week's close. Market movements were influenced by ongoing regulatory developments and investor sentiment in decline from tariff noise. 
Debt Markets: In addition to the tariff announcements putting pressure on longer-duration Treasuries, commentary from major rating agencies that focused on rising concerns about growth in 2025 and the growing potential for a U.S. debt downgrade caused prices of longer maturity bonds to decline. However, a lingering sense of general fear in the markets is keeping a bid in shorter-duration Treasury securities prices.}

_{Our client portfolio hedges of short duration US treasury Bills, gold, international equity funds and tilt towards value sectors and individual holdings such a Berkshire Hathaway have worked out well to soften the correction in the markets and afford ballast during the approximate 9% US equity market declines coming off the recent all-time highs in the major market indices.}

_{Investors expect a lot of bad things to happen in the coming months. However, if they are wrong the declines in the major market indices will have been an opportunity to buy good company stocks at substantial discounts. In addition, depressed sentiment could be a set-up for a possible extended bounce if the tariff headlines of April 2nd are not as bad as feared (India and US and other nations are making progress towards trade deals) which is something to keep in mind as we near that date.} 

_{I have not heard anyone on the financial networks making a point that the tariff noise may have also had the intention to take the air out of an overly inflated stock market that was making new highs in spite of all the headwinds and the Fed being in a box not able to raise interest rates to reduce the irrational exuberance in equities. You see the Fed raising interest rates would increase the cost to service the out-of-control US debt inherited by the new Trump administration. I will throw that theory in the ring as not much of what is happening in the markets or the world for that matter makes much sense . . . . stay tuned and buckled up for continued volatility in the markets and remember that volatility is the price investors pay for higher longer term returns on their investments.} 

Noise vs Signal

There can be a lot of noise in the market from time to time. This can make it hard for investors to interpret information as they search for the actual signal.

Last week, investors were trying to interpret the White House decision to impose tariffs on all cars and some car parts made outside of the U.S. While some automakers are domestic and others are foreign-based, the question is whether companies will absorb the additional costs, pass them on to consumers, or look to build factories in the United States.⁷

Separating the noise from the signal may take time, which can be more challenging when the markets react to new tariff updates as they are announced.

Partner with a Certified Financial Fiduciary - In these volatile and uncertain times, the biggest value of working with a seasoned advisor, acting as a fiduciary, is having someone to help control emotions and not get caught up in making bad investment decisions. Let's face it, when times are turbulent, emotions will often trump logic, leading to devastating financial decisions. 

Email julie@castlefinancial.com or call us at 732-888-4994 to schedule a complimentary 30 minute consultation and second opinion if you are not already a valued client of Castle Financial.

This Week: Key Economic Data

Tuesday: ISM Manufacturing Index. PMI Manufacturing. Construction Spending. Job Openings.

Wednesday: ADP Employment Report. Motor Vehicle Sales. Factory Orders. Fed Official Adriana Kugler speaks.

Thursday: Jobless Claims. ISM Services Index. Fed Balance Sheet. International Trade in Goods & Services. Fed Officials Philip Jefferson and Lisa Cook speak.

Friday: Employment Situation. Fed Officials Michael Barr and Christopher Waller speak.

^{Source: Investors Business Daily - Econoday economic calendar; March 28, 2025
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

No major companies are reporting this week.

^{Source: Zacks, March 28, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“The greatest danger to our future is apathy."

– Jane Goodall

Things You Can Do on the IRS Website

While the IRS website might not be in your top bookmarks, the website is helpful for a lot of things regarding taxes. Here are just a few things you can do on the site:

• Use Free File to access brand-name tax software and online fillable forms. 
• Use the IRS e-file system: a safe, easy, and common way to file your tax return.
• Check the status of your tax refund.
• Find out how to make payments electronically to pay your federal taxes. You can use a credit or debit card or enroll in the US Treasury’s Electronic Federal Tax Payment System to pay your taxes.
• Get tax forms and publications, including helpful tips for frequently asked questions.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁸

Improve Your Swimming with Masters Swim

Swimming is a fantastic full-body, low-impact workout for people of all ages. Check out US Masters Swimming for a club near you as the weather warms up! USMS is an organized swimming club for swimmers of all levels. Swimming with a Masters club is a great way to build camaraderie, meet new friends, get better at swimming, and enjoy a great workout. There are clubs all over the country, likely at a pool near you, which you can find through the Club Finder tool on the USMS website. The coaches will help you start (and stick with) a swimming routine, improve your stroke, and learn more about the sport.

Tip adapted from US Masters Swimming⁹

It can only be broken with force, yet it can be dulled by contact with a piece of paper. What is it?

Last week’s riddle: Out of the 100 years in the 20th century, there is only one that reads the same upside down as it does right side up. What year is it?
Answer: 1961.

Llama Guanaco
Torres del Paine National Park, Chile

Footnotes and Sources

^{1. The Wall Street Journal, March 28, 2025}

^{2. Investing.com, March 28, 2025}

^{3. CNBC.com, March 25, 2025}

^{4. CNBC.com, March 26, 2025}

^{5. CNBC.com, March 27, 2025}

^{6. The Wall Street Journal, March 28, 2025}

^{7. MarketWatch.com, March 27, 2025}

^{8. IRS.gov, August 22, 2024}

^{9. US Masters Swimming, October 3, 2024}