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WEEK AHEAD
April 14-18, 2025
As volatility spiked from President Trump’s global tariff wars, our trend-following technical signals remain in down-shift neutral territory (60/40). Unless the heightened market uncertainty and hazy tariff outlook eases or worsens, we expect to remain in this neutral position indefinitely for the time being.
Week in Review: S&P 500 Ends Volatile Week Higher Amid Intensifying US-China Trade Tensions
The S&P 500 experienced a tumultuous yet ultimately positive week, gaining +5.7% as global markets reacted to escalating trade tensions between the United States and China. The week began on shaky ground after President Trump announced sweeping reciprocal tariffs targeting over 180 countries. Markets initially reeled, but Wednesday saw a historic turnaround.
At 1:18 PM ET on Wednesday, President Trump declared a 90-day pause on new tariffs and a temporary reduction in existing tariffs to 10%, effective immediately. This surprise announcement ignited a massive rally, with the S&P 500 surging 9.5%—its largest single-day gain since 2008.
The rally was fueled by hopes that this pause would offer room for diplomatic engagement, as over 75 countries reportedly reached out to U.S. officials to discuss tariffs, trade barriers, currency manipulation, and related issues. This move appeared to be part of a pre-planned strategy by the administration to incentivize negotiations.
However, U.S.–China trade relations remained a notable exception. China vowed to "fight to the end," raising tariffs on U.S. imports from 34% to 84%. In response, the U.S. hiked tariffs on Chinese goods from 104% to 125% and later clarified a total % tariff rate of 145%. China countered by lifting its tariffs on American goods to 125%, intensifying the trade standoff. Meanwhile, China's economic data showed signs of stress: CPI fell 0.1% year-over-year in March, while PPI dropped 2.5%. Goldman Sachs downgraded China's GDP growth forecast to 4.0% for 2025 and 3.5% for 2026.
Following the record rally, momentum faded on Thursday as investors digested the ongoing risks, with the S&P 500 sliding 3.5%. Yet the index rebounded on Friday, closing the week with a robust 5.7% gain.
Economic indicators released during the week painted a mixed picture:
Meanwhile, the 30-year Treasury yield eased to 4.836%, a sign that investor concerns over a tariff-driven economic downturn may be subsiding.
In corporate news, the first quarter earnings season kicked off with strong results from JPMorgan Chase, Wells Fargo, and Morgan Stanley. Apple Inc. rebounded more than 4% after recent declines. Conversely, Tesla ended the week flat after suspending Model S and Model X orders in China amid the tariff dispute.
Week Ahead
The holiday-shortened week ahead is packed with high-stakes earnings and key economic signals at home and abroad. Markets will be parsing fresh data on U.S. retail sales, industrial production, and the Philadelphia Fed manufacturing index for clues on consumer strength and the labor market's resilience. Across the Pacific, China will be in the spotlight with GDP, trade balance, and FDI numbers that may echo the recent slowdown flagged by weaker CPI and PPI prints. Meanwhile, the Q1 earnings deluge continues with heavyweights like Goldman Sachs, Bank of America, UnitedHealth, Netflix, and TSMC stepping into the earnings confessional. Though markets are closed Friday for Good Friday, there's little chance this week will lack action or market-moving surprises.
"The sweeping U.S. tariff announcements went beyond anything I could have imagined in my 49 years in finance. This isn't Wall Street versus Main Street. The market downturn impacts millions of ordinary people's retirement savings. I think you're going to see, across the board, just a slowdown until there's more certainty. And we now have a 90-day on the reciprocal tariffs — that means longer, more elevated uncertainty."
— Larry Fink, CEO of BlackRock, April 11, 2025
From McKinley to MAGA: What Tariff Politics Teaches Us About Market Narrative Risk
Volatility is back from the dead, and once again, tariffs are trending.
We've seen this play before. Before Trump's "America First" trade agenda, there was William McKinley—who, in the 1890s, made tariffs the centerpiece of his presidential platform. Back then, the U.S. faced its own version of economic anxiety: the rise of European manufacturing, labor dislocation, and fears that American strength was slipping abroad.
McKinley responded with the 1890 Tariff Act—jacking up duties to protect domestic industry and jobs. It was framed as patriotism, not policy.
Trump's tariffs followed the same script: strongman economics for a fragile system—and a country in debt.
For financial advisors navigating volatile client sentiment, this matters. Tariffs are more than policy shifts—they signal cultural and narrative risk. They surface when voters—and by extension, markets—no longer believe the existing economic story holds up. [Throw in CNBC and Reddit, and suddenly, the line between information and provocation gets blurry.]
And yet, history is clear: tariffs tend to win elections, not solve structural problems.
McKinley's tariff regime led to global retaliation, inflationary pressure, and backlash. Trump's trade wars had a similar arc—spurring volatility, distorting supply chains, and muddying price signals for investors. And poking the bear—more specifically, the panda bear.
But today's investors aren't just market participants but stakeholders in the national narrative. You could argue that the American investor has successfully rebranded as a believer in the industrial revival. These "investors" didn't just rebalance portfolios—they voted for a new trade agenda.
Unlike most politicians, Trump acted. Whether those moves were right or wrong is almost beside the point—the results won't be fully known for years. But one truth has already emerged: China is serious. There's no "art" in the deal—just a steely commitment to long-term dominance. As Jon Stewart from The Daily Show recently pointed out, "They (U.S) are breaking something that did serve us maybe not phenomenally, but ok. And we had a really strong hand in building it. And now we're pretending like they did it to us. And that feels unfair." And while the U.S. may have had its reasons for decades of free trade, it's hard to deny who benefitted most. Hint: it wasn't Ohio.
Today, the real risk for advisors and their clients is the narrative loop—where political theater becomes market reality. We saw that this week.
As Dr. Jason Hsu reminded our team recently:
"You can't decouple from China and expect Amazon Prime delivery speeds. The real work is in redefining efficiency—not just protecting it."
Advisors must do the same—guide clients beyond headlines to strategy:
Tariffs may be a political solution. But for portfolios, they're a test of discipline, context, and clarity.
History reminds us that when the narrative shifts, advisors who stay anchored outperform.
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.