Tariff Delay Leaves Stocks Higher on the Week

Performance for Week Ending 4.11.2025:

The Dow Jones Industrial Average (Dow) added 5.0 percent, the Standard & Poor’s 500 Index (S&P 500) gained 5.7 percent, and the Nasdaq Composite Index (Nasdaq) finished up 7.3 percent. Sector breadth was positive, with nine of the 11 S&P sector groups closing higher. The technology sector (+9.7 percent) led the advance, followed by industrials (+6.5 percent), and communication services (+6.4 percent).

*See below for Index Definitions

MARKET OBSERVATIONS: 4.7.2025  – 4.11.2025

The S&P 500 finished the week higher, with the bulk of the gains coming in a single session after President Donald Trump announced a 90-day pause on higher reciprocal tariffs that hit dozens of trade partners, while raising duties on China to a collective 145 percent. Following the announcement, the S&P surged by 9.5 percent, its largest one-day gain since October 2008. On Thursday, the market gave back about a third of the gain as investors grew fearful of retaliation from China, which came on Friday morning when the country announced they will raise tariffs on all U.S. goods from 84 percent to 125 percent starting April 12. While the relationship with China will likely remain strained for the foreseeable future, Trump announced that more than 75 countries had contacted his administration to negotiate on trade barriers. In another twist, late Friday the White House dialed back a major component of its tariff policy by exempting a large portion of the electronics industry—smartphones, computers, semiconductors, etc.—from its levies placed on China. The decision is retroactive to April 5. While the move sends a signal that President Trump is willing to make further accommodations, it could open the door to other industry participants to lobby for exemptions.

FOMC Meeting Minutes: At last month’s Federal Open Market Committee (FOMC) meeting, Federal Reserve (Fed) officials pointed to the risk of stagflation, a scenario in which economic growth slows even as inflation remains stubbornly high. Almost all Fed officials viewed “risks to inflation as tilted to the upside and risks to employment as tilted to the downside,” according to the minutes of the March 18–19 meeting. The minutes also showed how officials were grappling with the risks that President Trump’s trade policies pose to their goals of stable prices and maximum employment ahead of his April 2 tariff announcement. Fed officials highlighted the risks of longer-lasting inflationary pressures from tariffs when they agreed to hold interest rates steady. The minutes also highlighted that officials thought their current interest-rate policy was "well positioned" to address potential risks, adding they could cut rates if labor-market conditions deteriorated, and the central bank could leave rates where they are if inflation worsened.

Fed Speak: The Trump administration's tariffs have the potential to push the rate of inflation up to around 3.5–4 percent this year while also slowing growth due to reduced immigration, well above the Fed’s 2 percent target, New York Fed President John Williams said Friday. Williams also highlighted that the high degree of uncertainty makes monetary policy decisions more difficult, though the current policy stance is positioned to deal with the uncertainty. Importantly, it gives us the opportunity to assess incoming data and developments and ultimately positions us well to adjust to changing circumstances that affect the achievement of our dual mandate goals." Speaking on CNBC, Minneapolis Fed President Neel Kashkari, in the most explicit comments yet from a Fed official about a possible emergency response to the volatility that has torn across markets in response to Trump's tariff barrage, said it would take a clear emergency in the financial system for the central bank to intervene. “If there's a dislocation—I'm not forecasting this, but if there were a dislocation—we have the ability to smooth out that dislocation,” Kashkari said. “But I'm not seeing big dislocations yet. I'm seeing some stresses, but markets seem to be adjusting.” Speaking at the Economic Club of New York Chicago, Fed President Austan Goolsbee said, “There is not a generic playbook for how a central bank should respond” to the tariffs the Trump administration is pursuing since it potentially puts the Fed's dual mandate of stable 2 percent inflation and low unemployment in conflict.

Economic Roundup: Inflation cooled broadly in March, indicating some relief for both consumers and producers, although the news received a lackluster response as the reports were viewed as a “pre-tariff reading.” The consumer price index (CPI), excluding often volatile food and energy costs, increased 0.1 percent from February, the least in nine months, according to Bureau of Labor Statistics. The headline CPI declined 0.1 percent from a month earlier, the first decrease in nearly five years. The inflation slowdown reflected a decline in energy costs, used vehicles, hotel stays and airfares. The cost of motor vehicle insurance—a main source of inflation in recent years—also retreated. Meanwhile, the producer price index (PPI) mirrored the CPI data, with wholesale prices falling in March by the most since October 2023, restrained by energy costs. While the data showed a retreat in price pressure, consumers are not buying it according to a survey done by the University of Michigan. According to the data, consumers are expecting prices to rise at an annual rate of 4.4 percent over the next five–10 years, the highest since 1991, and up from 4.1 percent a month ago. On a one-year basis, consumers saw costs rising 6.7 percent, the highest since 1981 and up from expectations of 5 percent last month.

The Week Ahead: Tariffs will remain front and center again during this holiday shortened week, with President Trump and Italian Prime Minister Giorgia Meloni set to meet at the White House on Thursday. Tariffs between the United States and the European Union likely to be a key topic of discussion. The focal points of this week’s economic calendar will be retail sales and industrial production for March, both due on Wednesday. According to Bloomberg, economists expect headline retail sales to advance by 1.4 percent on a month-over-month basis, up from 0.2 percent in February. The Bloomberg forecast for industrial production is -0.2 percent, down from 0.7 percent in February. Due to the recent tariff developments, the signal and importance of data releases may be muted and downplayed by investors. First quarter earnings season will begin to move to the front burner this week with 32 members of the S&P 500 scheduled to report. Among this group will be Dow members Goldman Sachs, Johnson & Johnson, Travelers, American Express, and UnitedHealth. Consensus expectations for first quarter earnings is for 6.85 percent growth. Investors are expected to listen carefully to forward guidance for clues on how tariffs could impact business trends. It will be a busy week for Fedspeak, with 10 members of the central bank slated to speak, including Fed Chair Jerome Powell on Wednesday.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market Index^SM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500^© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.