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Weekly Market Recap: Markets Caught in the Crossfire - Earnings Strength Meets Tariff Tensions Thumbnail

Weekly Market Recap: Markets Caught in the Crossfire - Earnings Strength Meets Tariff Tensions

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Market Overview

Markets lost ground last week as geopolitical friction, sectoral investigations, and mixed Fed signals interrupted a post-rally calm. The S&P 500 fell 1.49%, while the Nasdaq (-2.62%) and Dow (-2.66%) lagged further. However, small caps broke from the pack with the Russell 2000 gaining 1.11%, supported by relative optimism in the domestic economy.

President Trump’s temporary tariff exemptions on consumer electronics initially boosted equities—especially tech—but markets reversed sharply after the White House launched national security probes into pharmaceuticals and semiconductors. Fed Chair Powell’s hawkish undertones midweek added to the selloff, sending Wall Street into renewed volatility. Despite solid earnings beats from BAC, C, AXP, GS, UAL, JNJ, and JBHT, the broader market struggled to maintain momentum.

International equities outperformed, with foreign stocks up 4.34% and emerging markets advancing 2.30%, aided by easing trade tensions in Asia and a strong early-week risk-on tone in Europe. Asian markets were buoyed by tech optimism and renewed dialogue with Japan and China, while the ECB’s 0.25% rate cut failed to inspire a late-week rally on the continent.


Federal Reserve Insights and Economic Roundup

Fed Chair Powell struck a cautious tone midweek, highlighting risks of higher inflation and slower growth due to tariffs while emphasizing a “wait for clarity” policy stance. Though markets hoped for a signal of policy easing, Powell denied the likelihood of a Fed put—disappointing equity investors but encouraging bond bulls.

Treasuries rallied, with the 10-year yield dropping 17 bps to 4.33% and the 2-year yield also down 16 bps. The 20-year Treasury auction drew solid demand, and yields across the board reflected growing risk aversion and demand for safe havens.

Retail sales jumped 1.4% in March, largely driven by autos and restaurant spending, yet real growth remained subdued, hinting at a slowdown in Q1 consumption. Import prices fell 0.1%, reflecting weaker demand and early signs of a cooling inflation environment. Finished consumer goods prices continued to decline, with household goods down for a second straight month.

Despite headwinds, top-performing equity sectors year-to-date include Consumer Staples (+6.5%), Utilities (+3.5%), and Real Estate (+0.1%), while Consumer Discretionary (-19.5%), Tech (-18.2%), and Communication Services (-11.4%) lagged significantly.

 

The Week Ahead

A packed economic calendar could bring more clarity on growth momentum and consumer strength:

  • Monday: Leading Economic Index (Mar)
  • Tuesday: Philly Fed Non-Manufacturing, Richmond Fed Manufacturing & Business Conditions (Apr)
  • Wednesday: S&P Global PMIs (Apr prelim), New Home Sales (Mar), Building Permits (final), Fed Beige Book
  • Thursday: Durable Goods Orders, Initial/Continuing Jobless Claims, Existing Home Sales (Mar), KC Fed Manufacturing Index
  • Friday: University of Michigan Consumer Sentiment (Apr final), KC Fed Services Activity, Bloomberg U.S. Economic Survey

With core CPI at 2.8%, unemployment steady at 4.2%, and GDP growth at just 2.4%, the market will be watching closely for any shifts in the Fed’s tone or data confirming broader economic deceleration.