AE Wealth Management: Market Minute — Market whiplash
Market whiplash
If the markets have you feeling a bit discombobulated, you’re not alone. After a rotten few days were capped by one of the best daily market performances ever on Wednesday, markets reversed course on Thursday and moved downward once again.1
Several things are causing the latest market gyrations. Bond yields continue to climb as the dollar sinks — and both aren’t positive economic signals for the U.S.2,3 Meanwhile, the volatility index (VIX) has pulled back somewhat but is still hanging out in the mid-40s.4 That’s after spending most of the past year in the teens, with brief exceptions in August 2024 (high 30s) and December 2024 (high 20s).
Markets also responded to the ongoing trade war with China. President Trump has taken proposed tariffs on the country from 125% to 145%, after pausing tariffs on all other countries on Wednesday.5
Thursday’s market drop came despite some good news. The Consumer Price Index (CPI) for March was actually negative month-over-month.6 It’s the first time that’s happened since May 2020 — and it’s the second consecutive month of improvement as we moved down to 2.4%.7
In other positive news, the budget bill (what President Trump has called the “Big Beautiful Bill”) moved forward in Congress.8 The House very narrowly voted in favor of the bill, which includes provisions for tax cuts and reducing government size. Republicans had stalled the bill on Wednesday, saying it didn’t take spending far enough. The next step is to reconcile the House version of the bill with the Senate version, as the House included deeper spending cuts than the Senate.
The positive didn’t outweigh the negative for markets, unfortunately. It seems likely that investors took profits from Wednesday’s rally, holding markets down today. However, the reality remains that in 90 days, markets could be back where they were just a few weeks ago, even as tensions with China continue to ramp up. Continue to remain patient, vigilant and disciplined as we wait out this volatility.
1 Brett LoGiurato, Karen Friar and Josh Schafer. Yahoo! Finance. April 9, 2025. “Stock market today: Dow explodes 3,000 points higher, S&P 500 has best day since 2008 as Trump pauses most reciprocal tariffs.” https://finance.yahoo.com/news/live/stock-market-today-dow-explodes-3000-points-higher-sp-500-has-best-day-since-2008-as-trump-pauses-most-reciprocal-tariffs-133616395.html. Accessed April 10, 2025.
2 Reuters. April 10, 2025. “What just happened in the U.S. Treasury market?” https://www.reuters.com/markets/us/what-just-happened-us-treasury-market-2025-04-10/. Accessed April 10, 2025.
3 Rich Asplund. Barchart. April 9, 2025. “Dollar Sinks and Gold Soars as US-China Trade War Escalates.” https://www.nasdaq.com/articles/dollar-sinks-and-gold-soars-us-china-trade-war-escalates. Accessed April 10, 2025.
4 Yahoo Finance. “CBOE Volatility Index (ˆVIX).” https://finance.yahoo.com/quote/%5EVIX/. Accessed April 10, 2025.
5 Yahoo Finance. April 10, 2025. “Trump’s tariffs on China now total 145%: What to know.” https://finance.yahoo.com/video/trumps-tariffs-china-now-total-193413308.html. Accessed April 10, 2025.
6 U.S. Bureau of Labor Statistics. April 10, 2025. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed April 10, 2025.
7 Jeffry Bartash. Morningstar. April 10, 2025. “Consumer prices fall for first time since 2020, CPI shows. Great. But now tariffs threaten to reignite inflation.” https://www.morningstar.com/news/marketwatch/20250410240/consumer-prices-fall-for-first-time-since-2020-cpi-shows-great-but-now-tariffs-threaten-to-reignite-inflation. Accessed April 10, 2025.
8 BBC. April 10, 2025. “Trump-backed budget bill approved in US House.” https://www.bbc.com/news/articles/c7vnnv6n29no. Accessed April 10, 2025.
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