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April 21, 2025

Beacon Weekly Investment Insights 4.21.25

Lead of Investment Strategy, Charles Pawlik, CFA, CFP®, provides insights to guide you through changing market conditions. Please read the full text below or download the PDF version.

Equity markets finished the shortened holiday week last week in negative territory, subsequent to a strong rally in the prior week off the back of the S&P 500’s historic one-day return of 9.5% on 4/9 when the 90-day pause on tariffs (with the exception of China) was announced. The S&P 500 closed last week down -1.5%, with the Dow Jones down -2.66% and the tech-heavy Nasdaq down -2.62%. Volatility also continued with respect to the 10-year treasury yield, which moved down from 4.49% to 4.33% during the week. Investors continue to grapple with uncertainty around the trajectory for economic growth, inflation, and tariff policy. They anxiously await any announcements around trade deals having been struck. Investors also digested comments from Fed Chair Powell last Wednesday who noted that the Fed’s dual mandate of maximum employment and stable prices may be conflicting due to potential impacts from the tariff policy, and that the Fed feels well positioned to maintain its current policy stance until more clarity around tariffs is achieved, amid increasing pressure from President Trump to cut interest rates.

Although current economic data has taken a back seat to the uncertainty around tariffs, it is worth noting that the retail sales report released last Wednesday came in ahead of expectations. Retail sales grew by 1.4% in March, up from 0.2% in the prior month, and relative to expectations for growth of 1.2%. Although much of the better-than-expected results can likely be attributed to customers rushing to buy ahead of tariffs being imposed, the report continues to underscore the mismatch between weak soft data (consumer sentiment and expectations), and hard data such as this retail sales report that have yet to show a meaningful slowdown. Further to this point, jobless claims decreased last week coming in at 215,000 which was down from the prior reading of 224,000 and below expectations for 225,000, signaling that the labor market continues to show resilience for the time-being. With that said, some mixed housing data was also released last week, with housing starts coming in at 1.32 million, below expectations for 1.41 million and down from the prior reading of 1.49 million as high mortgage rates and economic uncertainty continue to weigh on activity. However, building permits came in at 1.48 million, ahead of expectations for 1.44 million and up from the prior reading of 1.46 million.

As noted above, the Dow Jones index and S&P 500 were both in negative territory last week. UnitedHealth Group was a notable decliner impacting the Dow Jones index, after announcing quarterly results and guidance that missed expectations due to increased medical costs. Nvidia also moved down meaningfully after announcing the company will be taking a $5.5 billion charge as a result of the U.S. government’s decision to impose licensing requirements for exports to China of H20 AI chips. Prior to these announcements, large money-center banks reported better than expected results boosted by strong trading revenues, and provided outlooks on deal-making that were more sanguine than anticipated. Overall, and although still early with about 12% of S&P 500 companies having reported results, aggregate earnings growth for the S&P 500 for the first quarter is 7.2%. The coming weeks will see a significant percentage of S&P 500 companies reporting including mega-cap tech companies, and investors will be paying close attention to management commentary on spending plans, guidance, and potential impacts from tariffs. We will continue to provide updates as earnings season unfolds.

As we have discussed in the past and as we continue to navigate a highly uncertain environment with on-going volatility, we remain focused on the importance of investing in high quality companies with a long-term and opportunistic mindset. We also continue to maintain a focus on the importance and value of diversification which has proved beneficial amidst the volatility, as international equities, bonds and alternative asset categories are all in positive territory for the year. In addition, we continue to ensure that sufficient liquidity is on hand to meet clients’ needs, so that stocks do not need to be looked to as a source of cash during volatile periods in the market.

Looking towards the week ahead, the U.S. Leading Economic Index will be released on Monday, and S&P Flash U.S. Services and Manufacturing PMI Indices will be released on Wednesday alongside New Home Sales. Durable-Goods orders will be released on Thursday, alongside Existing Home Sales. Consumer sentiment will be released on Friday, and a number of Fed officials are scheduled to speak throughout the week.

Market Scorecard:	4/17/2025	YTD Price Change
Dow Jones Industrial Average	39,142.23	-8.00%
S&P 500 Index	5,282.70	-10.18%
NASDAQ Composite	16,286.45	-15.66%
Russell 1000 Growth Index	3,441.50	-14.86%
Russell 1000 Value Index	1,736.03	-4.82%
Russell 2000 Small Cap Index	1,880.62	-15.67%
MSCI EAFE Index	2,390.90	5.71%
US 10 Year Treasury Yield	4.33%	-24 basis points
WTI Crude Oil	$64.68	-9.82%
Gold $/Oz.	$3,328.40	26.03%