(Justin Vaughn, Editor, Options Trading Report)
Last week finished on a ‘down note’, led by the Dow Jones Industrial Average, falling near 700 points. The tech heavy Nasdaq lost 2.7%, with favorite high techs and chips, including the Magnificent 7, leading the way. Negative news pushed all stocks lower, especially the latest reading of the core PCE, detailing that prices rose 0.4% month over month and 2.8% year over year, fighting the Fed’s magic mark of a 2% goal. The University of Michigan released the March Consumer Sentiment Survey reading at 57, a deep drop from the prior month of 64.7, with consumer concern over inflation and the general economy. At the end of the day investors and traders were “running for cover.” April Fools Day was a topsy-turvey session with the Dow Jones Industrial Average bouncing up 410 points, while the S & P 500 and Nasdaq edged up 0.6% and 0.1% at day’s end. March’s numbers were a different story, with the Nasdaq blazing lower at 10.6% and the S & P 500 dropping 4.6% respectively. “For the first time in a while you can have a conversation about: Might European equities be the best place for the next two or three years?” said John Porter, chief investing officer at Newton Investment Management. “You can have that conversation for reasons other than they’re cheap.” President Trump’s Liberation Day, April 2nd, was severely negative with the Dow Jones, 675 points or 3.42% drop. Both the S & P 500 and the Nasdaq averages folded down 3.5% and 2.22% respectively, to end the heavy selloff. Techs, Chips, and the Magnificent 7 were heavy losers as billions departed the marketplace. President Trump announced tariffs that will impact 185 countries. China will bear the largest tariff average of 34%, the European Union is hit at a 20% rate, while India’s rate is 26%. No country is “free,” as Trump’s sweeping April 2 cuts a broad range, with a two-edged sword! Many American companies, especially high techs, took massive stock hits Wednesday.
Thursday’s market was truly a disaster, with the Dow Jones Average off another 1700 points, the S & P 500 falling 4%, and the tech heavy Nasdaq Composite led all the indexes down over 5%. The Magnificent 7 lost over $800 Billion in value! The American economy is now dangerously close to a recession, possible in the next 12 months! The U.S. has not seen such tariff rates in over a 100 years! At the dreadful closing of the market Thursday the Dow Jones plunge was the fifth worst point drop in their history! The tech heavy Nasdaq Composite lost an historic 6%, while the steady-eddy S & P 500 sank 5%, with both indexes taking big losses in value, influenced by heavy tariffs around the world… a never before seen economic event!
Gold continues to be a “safe-haven” for investors and traders in this economic market, as it trends upward, responding to President Trump’s extremely high tariff initiation. Gold hit another high on Wednesday at $3.173. a troy ounce, its best quarterly performance in 40 years! Some feel that there’s every reason to position their capital with gold.
RUMBLINGS ON THE STREET
Dustin Thackeray, chief investment officer at Crewe Advisors, WSJ – “I am a little concerned about the April 2 announcements. We may have more questions than answers coming out of it. Uncertainty and volatility [are] kind of the words for the time being.”
Brett Ryan, senior U.S. Economist at Duetsche Bank, Yahoo Finance – “The tariffs were definitely worse than we had anticipated.” Adding “I wouldn’t say it’s outright recessionary. I would say that it certainly increases the risk of recession.”.