NEW YORK (AP) – Early April brought grim news for the stock market. President Donald Trump’s campaign promise materialized as we announced sweeping tariffs on virtually all US trading partners, sending the S&P 500 down 12% in just 4 days.
Economists raised alarms about a potential recession. Consumer confidence, already waning, took another hit. Business leaders struggled to provide investors with a clear financial outlook.
However, this week, the S&P 500 surged by 5.3% after a positive test in 2025. Not long ago, the index, critical to many 401(k) accounts, had plummeted by nearly 15% annually.
Analysts caution that the tariff saga is far from over, and stocks may dip again. Yet, the market’s recovery appears promising. Here’s what unfolded:
“Liberation Day”
On April 2nd, Trump addressed the nation from the Rose Garden, unveiling tariffs that were sharper than anticipated against nearly all US trading partners. With a special focus on China, he escalated import duties from China to 145%. In retaliation, China imposed tariffs on US goods at 125%, leading to a mass exodus of investors from the US stock market.
Pause 1
On April 9, Trump tweeted a “90-day suspension” on most of the tariffs he had announced the prior week, with exceptions for China. The S&P 500 surged by 9.5%, marking one of its best days ever.
Bonds and Dollars
Trump seemed to overlook the turmoil in the stock market, which contradicted his earlier claims about the flourishing Dow. However, he couldn’t dismiss the warning signs in the bond and forex markets.
The rising prices of US government bonds have raised concerns that the US Treasury may be losing its status as the safest place for cash. Additionally, the US dollar’s value declined, signaling eroded confidence in the US as a safe investment haven.
Unlike stocks, the Treasury and the dollar have not faltered completely. Some of this can be attributed to changing expectations regarding Federal Reserve interest rate actions, yet it still reflects a global apprehension about the US.
Economy
Consumer sentiment has declined—one measure has dropped for five consecutive months—yet investors cite “hard data” showing the economy remains robust, evident in job growth. Recent figures indicate that employers added 177,000 jobs in April, easing inflationary pressures.
Many Benefits
Despite market upheaval, US companies continue to deliver impressive earnings reports, surpassing analyst expectations early in the year. Historically, stock prices follow profit trends, providing a significant boost to the market.
Three out of four S&P 500 companies have outperformed analysts’ profit forecasts in recent weeks, including major players like Microsoft and Metaplatforms. According to Factset, they are on track for approximately 13.6% growth year-over-year.
Pause 2
This month, Wall Street’s outlook brightened as the US demonstrated willingness to engage in trade negotiations. Last week, the administration signed a pact with the UK. The biggest headline was the announcement that the US and China are temporarily rolling back tariffs this Monday. This news propelled the S&P 500 to heights not seen since the initial tariff suspension.
What’s Next?
Despite businesses posting better-than-expected profits, many remain uncertain about future developments. CEOs have reduced or withdrawn financial forecasts for the year amid prevailing uncertainty about the resolution of Trump’s tariffs.
Market giants like Apple and Alphabet have already experienced double-digit declines this year, while the Nasdaq Composite, heavily weighted with tech companies, is down 0.5%.
Analysts will quickly remind investors that the majority of tariffs are currently suspended, but not eliminated. Trump maintained a baseline 10% tariff on other countries, and US tariffs on China remain at 30%.
“I urge investors to exercise caution in the near term and remain prepared for unexpected trade developments,” advised Louis Wong, director of Hong Kong’s Philip Securities Group, earlier this week.
Source: apnews.com