Tariffs take early market toll

Despite mostly-solid economic data—including an estimate-topping monthly jobs report last Friday—US stocks experienced their biggest weekly decline in more than five years as the long-awaited unveiling of White House tariffs added to already-high market volatility.

The S&P 500 (SPX) bounced in the three days leading up to last week’s tariff announcement, but posted its biggest (-10.5%) two-day drop since March 12, 2020 after it, falling to its lowest level in 11 months on Friday:

The headline: Biggest down week for stocks since March 2020.

The fine print: Last week’s post-tariff market response made sense in that last Wednesday’s announcement turned out to be something of a double whammy: The proposed tariffs were higher than expected, but little of the uncertainty—which had already been driving volatility before the announcement—was removed, since the duration of the levies, and possible exemptions, remained an open question.

The number: 0, the number of rate cuts Morgan Stanley & Co. now expects for the remainder of 2025.¹

The scorecard: The Nasdaq 100 (NDX) tech index fell the most, ending the week in a bear market, as did the Russell 2000 (RUT) small-cap index:

Sector returns: The strongest S&P 500 sectors last week were consumer staples (-2.2%), utilities (-4.5%), and real estate (-6.1%). The weakest sectors were energy (-14.1%), information technology (-11.4%), and financials (-10.3%).

Stock movers: Corcept Therapeutics (CORT) +109% to $114.22 on Monday, CoreWeave (CRWV) +42% to $52.57 on Tuesday. On the downside, Vaxcyte (PCVX) -46% to $37.76 on Monday, Edgewise Therapeutics (EWTX) -23% to $15.52 on Wednesday.

Yields: The benchmark 10-year Treasury yield ended the week 0.27% lower at 3.98%, its first close below 4% since October 4, 2024.

Futures: After closing at a new record high last Wednesday, June gold futures (GCM5) sold off after the tariff announcement, ending the week down $79.90 at $3,035.40. Friday’s 6%-plus sell-off dropped crude oil prices to their lowest level in four years. May WTI crude oil (CLK5) ended the week down $7.37 at $61.99. Biggest gainers: April VIX (VXJ5) +18.9%, April bitcoin (BTCJ5) +3%. Biggest decliners: May copper (HGK5) -8.5%, May cocoa (CCK5) -8.4%.

We get inflation data, consumer sentiment, and FOMC minutes, but expect those numbers to take a back seat to the tariff story:

●Monday: consumer credit
●Tuesday: NFIB Business Optimism Index
●Wednesday: wholesale inventories, FOMC minutes (March meeting)
●Thursday: consumer price index (CPI)
●Friday: producer price index (PPI), preliminary consumer sentiment

Big banks kick off a new earnings season on Friday:

●Monday: Levi Strauss (LEVI), Dave & Buster's (PLAY)
●Tuesday: RPM (RPM), WD-40 (WDFC), Cal-Maine Foods (CALM),
●Wednesday: Delta Air Lines (DAL), PriceSmart (PSMT), Constellation Brands (STZ)
●Thursday: CarMax (KMX)
<●Friday: Blackrock (BLK), Fastenal (FAST), JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

“Sell-off in line with norms” showed how, in the context of the SPX’s other corrections from record highs, the market’s current retreat (as of last Thursday) hadn’t been unusual from a historical perspective, even though it has certainly been a challenge for investors.

Friday’s follow-through selling produced the SPX’s biggest one-week decline since March 2020, and only eight weekly sell-offs over the past six decades have been larger. While there’s no way to forecast market tops or bottoms, especially in environments like this one, the SPX’s performance after weeks like last week suggests the potential for at least a short-term bounce.²

But there is, admittedly, scant evidence to go on. The SPX fell 9.1% last week, and it’s fallen that much while closing at its lowest level in at least 12 weeks only seven other times. If we cast a slightly wider net and look at 7.5% weekly declines and eight-week (or longer) lows, we find the index closed higher the following week nine of 12 times, with a median gain of 1.1%.

Finally, it’s worth noting the five other times the SPX fell 10% or more in two days occurred during some of the most notable market episodes of the past four decades: October 19-20, 1987 (market crash), November 6 and 20, 2008 (financial crisis), and March 12, 2020 (COVID pandemic). The SPX experienced  more volatility and/or additional downside in all of these cases, although in two of them (1987 and 2020) it was also relatively close to its eventual sell-off lows.

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¹ MorganStanley.com. Tariff Takeaways. 4/3/25.
² All figures reflect S&P 500 (SPX) weekly closing prices, 1965-2025. Supporting document available upon request.