Where to begin? I cannot recall a crazier time in the stock market.
The S&P 500 index shed $5 Trillion in 2 days last week according to Reuters.com.
Where do we go from here, the important question! The short-term answer will remain elusive until we have clarity regarding how companies plan to deal with the situation. In addition, who knows what may change, positive or negative, even between the time I am writing this blog (Sunday morning) and publication during the week.
I am sure you are all aware of tariff percentages. My thoughts: assuming tariffs truly stay, I am expecting most prices to increase between 5% and 20%. I call this additional tax a foreign consumption tax.
Why 5 to 20%? If most countries are hit with a 10% tariff, some companies may pass 100% to consumers and some will absorb a portion, landing prices in the middle. Obtaining goods and materials from countries who are now subject to higher tariffs may elevate pricing even further. Either way, our money may not stretch as far, a few months from now.
For automobiles, it will be a wait-and-see. Some manufacturers have existing inventory that may shadow results early on. Think about leasing customers whose leases are ending. Will leasing customers begin to purchase their leased autos instead of purchasing or leasing new ones? If interest rates stay down, this could very well be the case, hurting the demand for new automobiles.
Let us keep in mind, supply and demand dynamics drive the pricing of goods and services. If very few people are dining at a restaurant, the owner will need to reduce pricing. If the tables are booked, they can maintain or increase pricing.
Increases in prices, without corresponding increases in wages and wealth typically leads us in the wrong economic direction.
When will the stock market hit a bottom? This made for interesting reading over the weekend as the writers for the Wall Street Journal, Barrons and CNBC certainly had plenty to debate. The consensus for a bottom is we simply do not know. When the market is in free-fall, it is almost impossible to tell when the direction will change. Many investors sell low and end up buying higher when the market direction ultimately changes.
Last Friday the S&P 500 finished at 5074. The index started January 2024 at 4769 according to Bigcharts.com. We have given up the small gains in 2025 and most gains from 2024. Let us hope a bottom is in sight. Keep in mind the stock market current level is an indication of how investors feel the economy will be performing 6 to 12 months forward.
Let us hope the Trump administration can quickly realize consumer and business confidence is so incredibly important as is sound, well-planned economic policy.
Cannot sugar coat this, so I won’t attempt!
All data sourced from Wall Street Journal, April 4, 2025.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.
