top of page
Search
  • Writer: Investment Research Partners
    Investment Research Partners
  • 5 days ago
  • 3 min read

The Charles Dickens novel, A Tale of Two Cities, famously begins,


“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us,”[1]


Although it was written in 1859, this excerpt so perfectly captures the last week in global markets that it only seemed fitting to open this piece with it. 


Equity markets fell significantly in the days following President Trump’s April 2 “Liberation Day” speech from the Rose Garden, as the level of tariffs announced far exceeded investor expectations and caused concern for the global economy.  Further trade war escalation began shortly thereafter as China and the US retaliated against one another, leading to the US levying a 125% tariff on China and China imposing an 84% tariff back (as of April 9, but this is obviously a fluid situation). 


US Treasuries, which are considered a safe haven asset, initially provided some respite to balanced portfolios, gaining as the equity market fell.  However, even that trade came into question this week as US Treasuries and other high-quality bonds began to fall along with stocks.  The underlying cause for the sell-off in US Treasuries remains uncertain, but speculation that foreign governments were liquidating positions, the tariff situation was causing confusion over the path for growth and inflation, and institutional investors were liquidating to cover losses were all narratives being floated.[2]


Markets opened lower on Wednesday, April 9, much as it had the previous days.  President Trump weighed in, posting, “This is a great time to buy”, potentially foreshadowing what was to come.  News that President Trump decided to pause retaliatory tariffs for 90 days on most countries spread quickly in the early afternoon, and equity markets quickly staged a historic relief rally.  The S&P 500 index, which was down double digits year-to-date entering the day, rallied 9.5% for the day, the fifth biggest single-day return in history.  The more technology-focused Nasdaq Composite index bounced even more, gaining more than 12% on the day (although most equity indexes remain negative year-to-date).[3] 

However, it is worthwhile to look at some of the other historic daily returns before jumping to any conclusions.  For example, three of the four biggest one-day returns in S&P 500 history occurred during the Great Financial Crisis in 2008-2009.[4]  All of those returns occurred before the market eventually bottomed in March of 2009, a reminder that one great day does not mean that the market has bottomed just yet.

While Wednesday provided some much-needed positive news for markets, we continue to encourage investors to stay diversified and remain patient.  We are still in the early days of President Trump’s second term, and we anticipate volatility, both big up and down days, to persist as we work through this reset in global trade.  We will get greater clarity from upcoming corporate earnings, economic news, and trade negotiations in the weeks to come. 


As always, we appreciate the opportunity to assist you in reaching your financial goals.  Please do not hesitate to contact your advisor if you would like to schedule a time to discuss these market developments in the context of your specific situation. 

 

Sources

Important Disclosures

The views expressed in this piece are the author’s and may not represent the opinion of Investment Research Partners. The views are as of the date listed on the material and are subject to change based on changes in fundamental economic or market-related data. Forecasts regarding the market, economy, and individual securities are subject to a wide range of possible outcomes. Past performance may not be representative of future results, and all investments are subject to loss. This piece is not intended as individualized investment advice. Before participating in any investment program or making any investment, readers are encouraged to consult with their own professional advisers, including investment advisers and tax professionals.



Comments

Back to Top

BACK TO TOP

bottom of page