At TM3 Wealth, it is important that you are well-informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month. If you have any questions or would like to continue the conversation, please reach out.
The week of April 7 through 11 delivered historic market volatility, as a sudden tariff reversal triggered a rollercoaster ride across US and global markets—from stocks and bonds to commodities and currencies. The S&P 500 started the week on shaky ground, slipping closer to bear market territory before plunging 1.6% on Tuesday in a panic-driven selloff marked by record trading volume. Then came a stunning turnaround Wednesday, with the S&P 500 soaring 9.5%—its biggest one-day jump since the financial crisis—after President Trump announced a 90-day pause on the 10% reciprocal tariffs. But the celebration didn’t last: Thursday brought another sharp drop, this time 3.5%. By Friday, markets ended on a more optimistic note, with the S&P bouncing nearly 2% to notch its best weekly gain in over a year. Behind the scenes, Treasury yields swung wildly, the dollar tumbled, and assets like oil, gold, and Bitcoin reacted to the chaos. All in all, it was a historic week of whiplash across financial markets.
Beneath the market’s turbulence, one bright spot emerged: a long-awaited dip in inflation. In March, the Consumer Price Index (CPI) fell 0.1%—its first monthly decline since 20201. Gasoline prices dropped 6.3% in March, contributing significantly to the overall CPI decline1. However, grocery prices rose 0.5% from February, with notable increases in eggs (+5.9% month-over-month)1. Annual inflation slowed to 2.4%, down from 2.8% in February1. Still, experts caution that newly announced tariffs could push prices higher in the months ahead.
Against this backdrop of inflation anxiety, consumer sentiment took a sharp hit in April. The University of Michigan’s consumer sentiment index dropped to 50.8—down from 57.0 in March and the lowest reading since mid-20222. The decline was broad-based, with all demographics reporting weaker views on business conditions, personal finances, income prospects, and the job market2. Short-term inflation expectations jumped to 6.7%, the highest since 1981, while five-year expectations climbed to 4.4%2. Concern about rising unemployment also grew, reaching levels not seen since 20092—fueling fears that cracks are forming in the labor market and recession risks are mounting.
The bottom line: Amid growing economic uncertainty, the US is experiencing heightened market volatility, investor unease, and growing concerns about a potential recession. While the 90-day tariff pause may offer temporary relief, market volatility is far from over. The US tariff rate remains historically elevated at 26.25%, and higher consumer prices stemming from tariffs might not fully appear until the May CPI report. With trade tensions intensifying, market instability is likely to persist, leaving investors cautious. Moreover, uncertainty surrounding future inflation and labor market conditions could reshape expectations for the Federal Reserve, potentially altering the anticipated two rate cuts this year.
Sources:
- Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
- University of Michigan Surveys of Consumers, http://www.sca.isr.umich.edu
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The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
The S&P 500® Index, or the Standard & Poor’s 500® Index, is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.
The University of Michigan Consumer Sentiment Index is an index that tracks consumer attitudes and expectations to determine the changes in consumers’ willingness to buy and to predict their subsequent discretionary expenditures. The index is comprised of measures of attitudes toward personal finances, general business conditions, and market conditions or prices.
The Bureau of Labor Statistics (BLS) is an agency of the United States Department of Labor. It is the principal fact-finding agency in the broad field of labor economics and statistics and serves as part of the U.S. Federal Statistical System. BLS collects, calculates, analyzes, and publishes data essential to the public, employers, researchers, and government organizations.
