Weekly Market Update – April 11, 2025

Quick Takes

• The S&P 500 Index jumped +5.7% in its best weekly gain since November 2023, rebounding from its worst week since March 2020. The rollercoaster market volatility, driven recently by tariff policy changes, mirrors past crises and follows familiar short-term patterns. Long-term investors should note that markets have historically recovered from such turbulence.
• Meanwhile, bonds faced significant pressure, with U.S. Treasury yields spiking sharply. The 30-year U.S. Treasury yield jumped +0.48 points to 4.873%, and the 10-year yield rose +0.5 points to 4.492%, marking their largest weekly gains since 1987 and 2001, respectively.
• The headline Consumer Price Index (CPI) slipped -0.1% for the month, the first fall since 2020. Like CPI, wholesale inflation was also weaker than expected in March with the headline Producer Price Index (PPI) down -0.4% for the month.

Source: Bloomberg. Data as of April 11, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks soar on 90-day tariff delay, but bonds sink

The S&P 500 Index posted its best weekly advance since early November 2023, gaining +5.7%. That comes after suffering its worst week since March 2020 the prior week. Unfortunately, these kinds of rollercoaster days, and weeks, are typical in times of extreme uncertainty. This time it’s a radical change in tariff policy roiling the markets, five years ago it was the COVID pandemic that sent the S&P down -15.0 during the week of March 20, 2020, and exactly 25-years ago the S&P sank -10.5% for the week ending April 14, 2020. For the week ending October 10, 2008, the S&P was down -18.2% as the Global Financial Crisis wreaked havoc on the U.S. economy. The point is, even when it feels different this time, the tug-of-war in short-term returns follows similar patterns. But diversified investors focused on the long-term should recognize that markets have recovered from such turbulent times throughout history.

That’s not to say that the tariff developments aren’t nerve-wracking. It was a 90-day pause on most reciprocal tariffs (except for those against China) announced on Wednesday that sent stocks soaring, resulting in the S&P 500 posting a +9.5% one-day return. It also rose +1.8% on Friday but was otherwise negative for five of the other prior seven days—sure to test most investor’s nerves. Perhaps lost in the tariff turbulence was the news that both consumer (CPI) and wholesale (PPI) inflation in March unexpectedly declined. 

Interestingly, while stocks closed the week on a high note, bonds came under intense pressure. Yields surged Friday as investors dumped bonds. The 30-year U.S. Treasury (UST) yield rose +0.482 percentage points to 4.873% last week — the largest one-week yield gain since April 1987. Yields for the 10-year UST rose +0.5 percentage points to 4.492%, marking the largest weekly gain since 2001. U.S. Treasury Volatility reached its highest level this week since October 2023 with the MOVE Index at 139.88. The Treasury yields may be moving higher due to tariff fears and its downstream impact, not fears of higher inflation. Other inflation sensitive indicators that the Fed focuses most like breakevens, oil prices, and shelter prices are trending lower. With bond yields soaring, the Bloomberg U.S. Aggregate Bond Index sank -2.5%, its worst week since March 13, 2020. Non-U.S. bonds, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, however, gained +1.3% for the week, helped by a U.S. dollar that declined -2.8% for the week. Many bond traders point to China defending its currency, as well as Europe entering a recession, and U.S. Treasuries and dollars are their best source of liquidity to fund those issues. Others are speculating that some hedge-funds are also facing liquidity issues that may be adding to the selling pressure.

The Week Ahead

This week will be a shortened trading week, with both equity and bond markets closed in observance of Good Friday. There are no major reports on Monday, then things get started on Tuesday with Import and Export Prices and the Empire State Manufacturing Survey. Wednesday is the busy day, with weekly MBA Mortgage Applications, the advanced reading on Retail Sales, Industrial Production, and home builder confidence. Thursday brings weekly unemployment claims, Housing Starts and Building Permits and the Philadelphia Fed manufacturing survey. 

With tariffs being the biggest story for Wall Street, international economic events may take on more prominence for U.S. investors. On Monday Japanese industrial production will be watched for any signs of tariff-influenced trends. Tuesday brings eurozone ZEW economic sentiment surveys and the Bank of Canada monetary-policy rate decision. Thursday brings the European Central Bank monetary-policy rate decision. 

Investors will keep a close eye on a number of Federal Reserve officials that will be out in the public. Philadelphia Fed President Harker and Atlanta Fed President Bostic are speaking on Monday. Cleveland Fed President Hammack speaks on Wednesday, and San Francisco Fed President Daly speaks Friday. 

If that wasn’t enough, more than 30 S&P 500 companies will be reporting first quarter earnings reports, dominated by financial services firms. Goldman Sachs kicks off the earnings party on Monday, followed by Bank of America, Citigroup, and Johnson & Johnson on Tuesday. On Wednesday we get results from Abbott Laboratories, ASML Holding, and U.S. Bancorp. American Express, Blackstone, Charles Schwab, Netflix, and Taiwan Semiconductor close out the week on Thursday.

Chart of the Week

The rate of inflation for consumer goods and services unexpectedly fell in March. The headline Consumer Price Index (CPI) slipped -0.1% for the month, the first fall since 2020. That was down from an unrevised +0.2% the prior month, and below the +0.1% that Wall Street was forecasting. Year-over-year (YoY), CPI decelerated to +2.4%, versus +2.8% the prior month and below expectations for a +2.5% annual rate. Core CPI, which excludes the more volatile food and energy prices, also slowed to +0.1% for the month, down from an unrevised +0.2% the prior month, and below expectations for a +0.3% rise. YoY Core CPI was +2.8%, down from an unrevised +3.1% the prior month and below expectations for +3.0% annual rate. Slumping Energy prices helped keep inflation down, as a -6.3% drop in Gasoline prices helped drive a -2.4% broader decline in the Energy index. The Federal Reserve and Wall Street generally considers the Core CPI as a better predictor of future inflation. The deceleration in inflation was broad based across goods and services. Shelter, which is about one-third of the CPI weighting, increased just +0.2% for the month and +4% for the year, the smallest gain since November 2021. Airfares fell -5.3% after falling -4% the prior month. Despite the wanted improvement in controlling inflation, the results will likely be discounted in the face of tariff implementations beginning to make their way across a broad array of supply chains. Still, excluding tariffs, inflation at both the consumer and wholesale (see PPI summary below) level in the underlying economy is looking like a non-issue.

Consumer Prices Fall for First Time Since 2020 but will Tariffs Reignite Inflation

U.S. Consumer Price Index (CPI), Year-over-year percent change

Source: U.S. Bureau of Labor Statistics, CNBC.

Did You Know?

FINANCIAL LITERACY MONTH – April is Financial Literacy month, but a recent poll from Pew Research found that while 67% of adults 65 and older know a fair amount about personal finances, the percentage is just 41% for adults between the age of 18 and 29. (Source: Pew Research).

TOP-HEAVY POPULATION  – 2025 is expected to be the first year in U.S. history during which the percentage of the population over the age of 54 (30.4%) will exceed the percentage under the age of 25. By 2033, annual deaths in the United States are forecast to exceed births, meaning the U.S. population would start to shrink. (Source: Congressional Budget Office).

BALLOONING DEBT – Right before COVID in 2019, federal debt held by the public was at 78.9% of GDP, but that figure is forecast to surpass 100% in 2026 (versus 97.8% in 2024) and reach a record 107.2% in 2029. The current record of 106.2% was reached in 1946 coming out of WWII. (Source: Congressional Budget Office).

This Week in History

NOW THAT WAS A BAD WEEK – The -9% drop for the Nasdaq Composite Index in the first week of April captured a lot of attention, being the worst weekly drop for the index since the COVID crisis of March 20, 2020—almost on the 5-year anniversary. But not as many investors will remember the 25-year anniversary of the Nasdaq’s worst week ever. Last week marked that milestone’s birthdate when, for the week ending April 14, 2000, the Nasdaq crashed -25.3%. It is the worst weekly drop ever for the index, coming during the dot-com internet bubble burst. Speculative frenzy around unprofitable internet companies coupled with Federal Reserve rate hikes and tax-related selling, triggered a panic sell-off, with a single-day plunge of nearly -10% on April 14, 2020. 

Economic Review

• Like consumer inflation, wholesale inflation was also weaker than expected in March. The headline Producer Price Index (PPI) was down -0.4% for the month, well below expectations for +0.02% and the prior month’s +0.1% (revised higher from +0.0%). Year-over-year (YoY) PPI increased at a +2.7% rate, also below expectations, which was for a +3.3% increase. That was down from the prior month’s +3.2% annual rate (unrevised). Core PPI, which strips out volatile food and energy costs, fell -0.1% for the month, better than expectations for a +0.3% rise and down from +0.1% the prior month (revised higher from -0.1%). YoY Core PPI was up +3.3%, below expectations for +3.6% and down from the prior month’s +3.5% annual rate (revised up from +3.4%). Energy prices were down -4.0% for the month, driving much of the decline. The bottom line is that the report shows inflation for wholesalers was suppressed but that good news will be questioned given that newly implemented tariffs are expected to lead to higher prices at least in the short term.
• The preliminary reading of the University of Michigan Consumer Sentiment Index for April fell to the second lowest level in history at 50.8 from a 57.0 final reading the prior month, and was well below expectations for 53.8. In the same period a year ago, the index stood at 77.2. The Current Economic Conditions component fell to 56.5 from the prior month’s 63.8 and was below expectations for a 64.4 reading. It was 79.0 a year ago. The Consumer Expectations component sank to 47.2, down from 52.6 and was short of expectations for 50.7. It was 76.0 a year ago. One-year inflation expectations increased to +6.7% from +5.0%, above expectations to come in at +5.2%. 5-10 year inflation expectations increased to +4.4% from +4.1% the prior month and was expected to be +4.3%. “Sentiment has now lost more than 30% since December 2024 amid growing worries about trade war developments that have oscillated over the course of the year,” said Joanne Hsu, director of consumer surveys at the University of Michigan.
• The Census Bureau reported Wholesale Inventories rose +0.3% to $902.3 billion in February, below expectations of +0.4% from the prior month’s -0.4% decline. Year-over-Year (YoY) inventories were up +1.1%, down from the +1.2% annual rate the prior month. That is still well below the typical +4% to +6% annual increase in strong economies. Inventories are goods produced for sale that have not been sold yet. Inventories have only added to GDP growth once in the past five quarters. Wholesale Trade Sales rose +2.4%, up from the prior month’s -0.9% (revised higher from -1.3%) and well above expectations for +0.8%. Wholesale inventories data isn’t adjusted for inflation. The Inventory-to-Sales Ratio was at 1.30 months, down from 1.33 the prior month and has trended lower for the last year. The ratio reflects how long it would take a company to sell all the goods sitting on warehouse shelves.  
• U.S. Consumer Credit declined -$0.810 billion in February, far below expectations for a +15.0 billion increase, and January’s $8.901 billion rise (revised lower from the initially reported $18.084 billion). That amounts to a -0.2% annual growth rate for the month, down from the +2.1% annualized growth rate the prior month. Growth for revolving credit, such as credit cards, was up +0.1%, down from the prior month’s +11.6% surge. Nonrevolving credit, which tends to be much less volatile than revolving credit and includes auto as well as school loans, slipped -0.3% following the prior month’s +0.8% rise. The data from the Federal Reserve is not adjusted for inflation and does not include mortgage loans, which is the largest category of household debt. The bottom line is that February marked the second contraction in consumer credit in the last four months.  
• The National Federation of Independent Business (NFIB) reported that their Small Business Optimism Index fell to 97.4 from an unrevised 100.7 the prior month. Seven of the 10 component indexes declined, two improved, and 1 was unchanged. The improvements came from the Plans to Make Capital Outlays and Current Job Openings components, which each rose by +2 points. Plans to Increase Inventories were unchanged. The biggest decline was Expect Economy to Improve, which fell -16 points but still remains tied for the second highest component with a net +21% (trailing only Current Job Openings, with a net +40%). The separately produced Uncertainty Index that is released with the Small Business Index fell -8 points from February’s second highest reading to 96. “The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg.
• The U.S. Treasury Department recorded a Federal Budget Deficit of $160.5 billion in March, compared to +$236.6 billion the same month last year, but slightly under expectations for a -$145.0 billion shortfall. Receipts were $367.6 billion, up +10.7% from the year earlier, while Outlays were $528.2 billion, a -7.1% annual decline. The increase in spending was largely due to Social Security and Net Interest payments, which more than offset the largest source of receipts, which was Individual Income Taxes and Social Insurance & Retirement receipts. The cumulative budget deficit for the first five months of fiscal 2025 has widened to -$1.307 trillion, 22.7% higher than in the same period in fiscal 2024. The Treasury Budget data are not seasonally adjusted so the current month cannot be compared to the prior month, but rather needs to be compared to the year earlier data.
• Weekly MBA Mortgage Applications surged +20.0% for the week ending April 4 following a -1.6% drop the prior week. The Purchase Index rose +9.2% after a rise of +1.5% the prior week. The Refinance Index soared +35.3% after falling -5.6% the prior week. The average 30-Year Mortgage Rate fell to 6.61% from 6.70% the prior week, their lowest level since October 2024.
• Weekly Initial Jobless Claims inched up by +4,000 to 223,000 for the week ending April 5, right in line with expectations. The prior week was unrevised. The number of people already collecting unemployment claims (i.e., Continuing Claims) fell by -43,000 to 1,850,000 in the week ending March 29, better than expectations for 1,886,000 claims. Last week’s reading was revised lower from 1,903,000 to 1,893,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.