(Justin Vaughn, Editor, Options Trading Report)
All three exchanges stayed ‘alive and active’ Friday after pondering President Trump’s easing back on the initiation of his tariffs. After a roller coaster week of market swings up and down, all three indexes finished positive. The Dow Jones Industrial Average on Friday added over 600 points, 1.5%, while the heavy-tech Nasdaq Composite bounced 2.1% and the S&P 500 advanced 1.8%, with all three indexes finishing positive, giving investors and traders confidence that somehow wading through the tariff debacle is possible. For the week indexes were all up, the S&P 500 was up 5.7%, the Nasdaq Composite added 7.3% and the blue chip Dow Jones Industrial Average finished up 5%, still well below before Trump instituted the tariff debacle. Gold was a ‘star performer’ up $77.00 to $3,254.00 a troy ounce, showing no signs of “changing direction.” Central Banks, consumers are continuing to accumulate the shiny metal. According to Yahoo Finance, gold is an “in demand commodity” leading many sectors in appreciation. Crude oil has settled in the low sixties, currently in the $63.00 range. The OPEC+ cartel has issued several comments that levels of production would be advantageous to maintaining price stability. The University of Michigan Survey of Consumers released Friday (4-11) revealed the consumer sentiment dropped to the lowest level in nearly 3 years and was “pervasive and unanimous according to respondents, which include: age, income, education, and political affiliation.” The Consumer Sentiment Survey dropped 11% from March to April according to Janet Hsu, Director of surveys at University of Michigan.
Monday’s session was cautious as investors and traders braced for more of President Trump’s tariff’s revisions. The tech-heavy Nasdaq edged up 0.6%, buoyed by Trump’s “temporary reprieve” of techs and chips, while the S&P 500 added 0.8%, and the Dow Jones tacked on 300 points. Trump announced that smart-phones, computers and specific consumer electronics were to be excluded from tariffs. Auto stocks were active and up as President Trump “hinted he may consider a ‘carve-out’ for up-coming auto tariffs.” The first spate of first quarter earnings of large financial companies trickled out with very favorable results. Early impact of tariff implementation is not expected to affect first quarter results. Current estimates of the effective tariff rates for all U.S. imports is settling from 22% to 27% all of which can change ‘on a dime,’ with Mr Trump. President has been vocal that he wants big oil to be near $50.00 a barrel. As oil prices have weakened to the $63.00 a barrel price, much more movement is needed. As earlier stated OPEC+ is not in that mind-set. Hopefully prices will work themselves out to the satisfaction of all parties.
Federal Reserve Chairman, Jerome Powell on Wednesday spoke candidly of President Trump’s tariff policies. He was highly critical, warning: “the potentially stagflation effects of Trump’s tariff policies are concerning,” Markets were disturbed, taken aback as the Dow Jones Industrial Average dropped 700 points, with the Nasdaq Composite falling 600 points. The steady-eddy S&P 500 fell 121 points. All three exchanges suffered severe financial losses as investors were busy reallocating capital into safer havens of investment, gold and bonds. Like President Trump, Mr. Powell speaks, the market listens…and reacts.
Gold was active Wednesday, surging to a new high of $3,350.00 a troy ounce, amid a downward market sell off. This year alone gold is up 25%, as investors believe and trust the value of gold. Many fund managers are predicting gold will be “the best-performing asset of 2025.”
RUMBLINGS ON THE STREET
Blerina Urnci, chief U.S. economist at T.Rowe Price, WSJ – “The Fed has its hands tied and I don’t think monetary policy support is going to be likely.” She adds, “I do think we do have to rely on the U.S. consumer being resilient and absorbing this shock if we want to see a recession being avoided this year.”
Chip Rewey, chief investment officer at Rewey Management, WSJ – “It seems like the market is sitting around waiting to see what the next tweet will be, or if China and Trump decide to negotiate. So you have a little bit of a sleepy session.”
Thitinan Pongsudhirak, a professor of international relations at Chulalongkorn University of Bangkok, WSJ – “Now is actually the worst time to be a U.S. ally because Trump and his people think that the allies have been ripping them off more than the adversaries.”