Weekly Market Insights | Rally Caps Volatile Week

Stocks ended the week with a strong gain as traders continued to focus on tariff talks while appearing to overlook upbeat news on inflation. The Standard & Poor’s 500 Index rose 5.7 percent, while the Nasdaq Composite Index gained 7.3 percent. The Dow Jones Industrial Average picked up 4.95 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased by 0.72 percent.^1,2

Stocks Rebound

Stocks rallied on Monday after a report surfaced that the administration was considering a 90-day pause on tariffs. But when the White House clarified its position, sellers stepped in On Tuesday, prices jumped at the next opening bell after the Treasury Secretary said the U.S. was open to tariff negotiations with trading partners. The rally stalled and reversed on news the administration was adjusting tariffs on Chinese imports.³

After the White House announced a 90-day pause on specific tariffs on Wednesday, markets pushed higher. The S&P 500 gained 9.5 percent, its largest one-day increase in 17 years.⁴  Stocks fell again Thursday morning, appearing to overlook an upbeat Consumer Price Index report showing that core inflation (excluding food and energy) rose at a 2.8 percent annual rate–the best number in more than four years. Stocks finished the week with a powerful rally, capping a volatile trading week.^5,6

^{The rally in stocks last week followed the prior week’ sell-off that has been historic in both pace and intensity, as was the massive 9.5% rally in the S&P 500 in one day. We witnessed a technical progression play out that we have only seen in the markets six times dating back to 1987.} 

^{The S&P 500’s Weekly RSI (relative strength index or momentum indicator) completed a full round turn from overbought territory, above a reading of 70, last registered in July 2024, all the way down to oversold territory amid a reading below 30. The six times we have seen this full round turn completed were in the following years: 1987, 2001, 2008, 2011, 2020, and now 2025. In each of those years the S&P 500 suffered a 20% or more peak-to-trough drawdown which is the technical definition of a bear market.}

^{With the exceptions of the rapid Black Swan declines experienced in 1987 and 2020, none of the initial oversold weekly RSI readings like we saw registered coincided with the establishment of a lasting market bottom and new sustainable rally towards new highs. Based on those statistics this market warrants ongoing close attention in the weeks and months ahead as further downside remains a very real threat.}

^{However, the future will be promising once we get past all the hurdles playing out. Equity markets may also be undergoing a shift. While the Magnificent 7 (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) have propped up markets in recent years, their global exposure is now at risk. With nearly half of revenues originating from overseas markets, many of the Magnificent 7 companies can be highly susceptible to the impacts of an escalating trade war and slowing global demand. The names that once felt safest may now be the most exposed. Investors must consider not just quality but positioning questioning: is this business built for where we’re going, not just where we have been? - something that we are monitoring very closely.} 

Watching the Bond Market

The yield on the 10-year Treasury rose more than 50 basis points for the week, marking one of the most significant moves on record. (When bond yields increase, bond prices tend to move lower.) Last week’s action was unexpected. In the past, investors have turned to U.S. bonds during market turbulence. However, the ongoing tariff talks have, at least temporarily, influenced how some overseas investors view U.S. bonds.^7,8 The bond market activity influenced the mortgage market, where the average rate on the popular 30-year fixed mortgage closed Friday at 7.1 percent, its highest level in two months.⁹

^{Gold prices surged last week, reaching new record highs amid escalating global uncertainties and market volatility. Gold opened the week at $2,982 per ounce on April 7 and climbed steadily to close at $3,239 by April 13, marking an approximate 8.6% increase over the week with gold continuing to break records.}

^{Reasons for Gold continuing to make new all-time historic highs}

^{Wars still raging in Middle East and Ukraine.}

^{Escalating Trade Tensions: The intensifying trade war between the U.S. and China leading to a worse global economic slowdown. Investors are turning to gold as a safe-haven asset amid this uncertainty.}

^{Market Volatility and Inflation Concerns: Persistent market volatility, coupled with concerns over rising inflation, has led investors to seek assets that can preserve value, bolstering demand for gold.} 

^{Central Bank Purchases: Central banks, particularly in countries facing economic sanctions or seeking to diversify reserves, have increased gold purchases, providing additional support to gold prices.} 

^{Weakening U.S. Dollar: The U.S. dollar has weakened against major currencies, making gold more attractive to investors holding other currencies and contributing to the metal's price increase.} 

^{Gold Outlook: Analysts remain optimistic about gold's trajectory, with forecasts suggesting prices could reach $3,500 per ounce by 2026, driven by ongoing geopolitical tensions, central bank demand, and economic uncertainties.}

^{The Fed is Trapped Between Economic Growth declining and Inflation Risks}

^{The Federal Reserve now faces one of its most difficult balancing acts in recent memory. Tariffs are expected to push prices higher in the near term, especially on goods like autos, electronics, and industrial inputs. But at the same time, business investment is falling, consumer sentiment is weakening, and economic growth may come under pressure.}

^{A potential “stagflationary” impact of tariff slowing growth and rising prices, has put the Fed in a bind. If the Fed cuts interest rates to cushion the growth slowdown, it risks fueling inflation that’s already set to rise. If it holds steady or tightens to control price pressures, it could accelerate the downturn. The President’s 90-day delay in reciprocal tariffs is not permanent, but it provides the clarity markets were hoping for leading into Q1 2025 earnings season, and as investors await new economic data points in an attempt to gauge the health of the global economy.}

^{Bitcoin and the digital space}

^{If the Federal Reserve lowers interest rates then you will again have a lot of fast, cheap money, some of which will likely flow  into the crypto space. The geopolitical situation is moving from a rules-based international order to a great powers conflict. There will be new stablecoin legislation and the Digital Asset Market Structure and Investor Protection Act will also likely get passed, which will help the crypto market. The laws aim to address the regulatory treatment of various digital assets. Both bills are currently working their way through the U.S. legislative process.}

^{The stablecoin bill in particular could lead the Magnificent 7 companies to begin adopting some digital assets. Until then, my guess is that the crypto market will continue to oscillate for probably the next three to five months, and then we may witness another wave of speculative interest come in the summer that could carry through another six to 12 months.}

^{Oil (black gold, Texas tea) saw prices tank by the recently intensifying dual headwinds of escalating trade-war tensions prompting recession fears and OPEC+’s larger-than-expected production hikes. Ultimately, those two influences bred fears that a potentially sizeable and lasting surplus could emerge in physical oil markets. As such, oil had sold off more than 23% month-to-date in April, before a more-than-7% rally off the lows that saw oil close with a 5.3% gain at about $61.50 per barrel for the week.
Looking ahead, the tariff relief that President Trump offered does help sentiment and eases the general level of uncertainty about global trade but it does not eliminate the threat of a global oil surplus emerging in 2025, which leaves fundamentals aligned with bearish technicals. Of course, a new war in the Middle East that disrupts oil supplies would change the dynamics for the worse.} 

^{Partner with a Certified Financial Fiduciary at Castle Financial - 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

Monday: Philadelphia Fed President Patrick Harker and Atlanta Fed President Bostic speak.

Tuesday: Import Price Index.

Wednesday: Retail Sales. Industrial Production. Business Inventories. Home Builder Confidence Index. Cleveland Fed President Hammack speaks. 

Thursday: Housing Starts. Building Permits.

Friday: San Francisco Fed President Mary Daly speaks.

^{Source: Investors Business Daily - Econoday economic calendar; April 11, 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

Monday: The Goldman Sachs Group, Inc. (GS)

Tuesday:  Johnson & Johnson (JNJ), Bank of America Corporation (BAC), Citigroup Inc. (C)

Wednesday: Abbott Laboratories (ABT), Prologis, Inc. (PLD)

Thursday: UnitedHealth Group Incorporated (UNH), Netflix, Inc. (NFLX), American Express Company (AXP), Marsh & McLennan Companies, Inc. (MMC), The Blackstone Group (BX), Infosys (INFY)

^{Source: Zacks, April 11, 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.}

"I think that we communicate only too well, in our silence, in what is unsaid, and that what takes place is a continual evasion, desperate rear-guard attempts to keep ourselves to ourselves. Communication is too alarming."

– Harold Pinter

Tax Tips for Farmers

If you own a farm, ranch, range, or orchard, here are some tax tips to consider:

• Insurance payments from crop damage may count as income. Check with your tax professional.
• If you sold livestock or items you bought for resale, you may have a taxable event.
• You may be able to deduct ordinary and necessary expenses that you paid for your business.
• Consider the tax treatment of your farm’s full and part-time workers.
• If your expenses are more than your income for the year, you may have a net operating loss. You may be able to carry that loss over to other years. 

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

Tip adapted from IRS¹⁰

How to Measure Your Heart Rate (Without a Smart Device)

There are so many smart gadgets to help us monitor our health, but knowing how to measure your heart rate without any tech is important to monitor your overall health. 

• To measure your heart rate, gently place your index and middle finger on a pulse point, such as your wrist right below the base of your thumb or your neck right under your jawbone.
• Lightly press until you can feel your heartbeat, then count the number of beats in 15 seconds. You’ll need a watch or clock to time yourself.
• Multiply this number by 4 to get your heart rate per minute.
• Feel free to repeat this exercise a few times to confirm your reading's accuracy.

Tip adapted from Harvard Medical School¹¹

I have a horn and am almost as large as a car, but I will never honk my horn or outrun a car or truck. What might I be?

Last week’s riddle: I can certainly run, but I will never be able to walk by myself. Wherever I go, thoughts are close behind me. What am I?
Answer: A nose.

Scenic Highway 93
Alberta, Canada

Footnotes and Sources

^{1. The Wall Street Journal, April 11, 2025}

^{2. Investing.com, April 11, 2025}

^{3. CNBC.com, April 8, 2025}

^{4. The Wall Street Journal, April 9, 2025}

^{5. The Wall Street Journal, April 10, 2025}

^{6. MarketWatch.com, April 11, 2025}

^{7. WSJ.com, April 9, 2025}

^{8. MarketWatch.com, April 9, 2025}

^{9. CNBC.com, April 11, 2025}

^{10. IRS.gov, June 4, 2024}

^{11. Harvard Medical School, December 12, 2024}