Daily market snapshot

Published April 4, 2025
 Woman on couch looking at laptop

Friday, 04/4/2025 p.m.

  • Equities close sharply lower as China retaliates with 34% tariffs – Equity markets extended their recent trend lower as China announced 34% tariffs on U.S. goods, starting April 10. The levies are in response to President Trump's hike of U.S. tariffs on products from China to 54%. Nasdaq and U.S. small-cap stocks are now in bear market territory. In international markets, Asia declined, led by Japan's Nikkei, which fell 2.75%, as the country will face higher-than-expected 24% duties on its exports to the U.S. Europe was lower as well, led by banks to the downside, as investors price in slower growth and lower interest rates*. The U.S. dollar advanced against major international currencies but remains down about 5% year-to-date. In commodity markets, WTI oil fell to its lowest price in four years on demand concerns and OPEC+'s production hikes*.
     
  • Job growth higher than expected in March – Total nonfarm payrolls grew by 228,000 in March, well above estimates calling for 130,000*. Figures for January and February were revised lower by 48,000, partially offsetting last month's gains. Health care and retail trade were the largest contributing sectors, adding a combined 78,000 jobs. Despite the strong job gains, the unemployment rate rose to 4.2%, as expected. Hourly earnings were up 3.8% annualized, missing forecasts calling for a 4.0% rise*. The upshot is that the labor market remained healthy going into the current trade tensions, providing growing employment and wage gains on average that are comfortably above inflation.
     
  • Bond yields drop further - Bond yields were down, with the 10-year Treasury yield at 4.02%, its lowest in six months. Bond markets are pricing in expectations for four cuts to the fed funds rate this year**, well above the Fed's own "dot plot" forecast, which reflects two cuts***. Markets appear to be reflecting the view that the Fed will need to cut rates in order to support the labor market as the economy slows due to escalation in trade tensions. However, the still-low unemployment rate and job openings exceeding unemployment suggest that the Fed's maximum employment mandate is effectively met. With Personal Consumption Expenditure (PCE) inflation at 2.5%, above the 2% target, we expect the Fed to remain on hold a while longer to gain more clarity on the impact of tariffs on inflation and growth.
     
  • Portfolio diversification remains critical - The potential risks to economic growth and corporate profits suggest that after falling into correction (10% decline from highs), the recovery in stocks will take a while to materialize. Patience and investment discipline will be key for investors to navigate the trade headlines, which no doubt will continue to dominate the market narrative.
     

    Despite the headwinds, the fundamental drivers of market performance remain more supportive than harmful: 1) unemployment is low; 2) the Fed remains in a rate-cutting cycle; 3) corporate profits are still likely to rise this year, though potentially less than the 10% expected before tariffs; and 4) the policy agenda may soon shift to pro-growth measures, such as tax cuts and deregulation.
     

    The good news for investors with balanced and diversified portfolios is that those portfolios have weathered the pullback better than those with concentrated positions in U.S. large-cap stocks. International stocks are up for the year, U.S. mid-cap stocks have outperformed, and bond prices have rallied, helping smooth out the equity-market volatility. At a sector level, industrials, technology and consumer discretionary could be more exposed to tariffs based on their heavier reliance on imports, while financials, utilities and real estate are more insulated from a trade war. 
     

    While the immediate drawdown in stock markets may be jarring, we recommend that investors stay with their long-term investment strategy, emphasizing diversification and high-quality investments. Avoid making emotionally charged investment decisions, and remember that time in the market has proven to be a better strategy over time than trying to time yourself in and out of the market. (Our Don't Fear the Bear report is a great reminder of this.) 
     

Brian Therien, CFA
Investment Strategy

Source: *FactSet **CME FedWatch *** Federal Reserve

Investment Policy Committee

The Investment Policy Committee (IPC) defines and upholds Edward Jones investment philosophy, which is grounded in the principles of quality, diversification and a long-term focus.

The IPC meets regularly to talk about the markets, the economy and the current environment, propose new policies and review existing guidance — all with your financial needs at the center.

The IPC members — experts in economics, market strategy, asset allocation and financial solutions — each bring a unique perspective to developing recommendations that can help you achieve your financial goals.

Learn More

Important information:

This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.

Investors should understand the risks involved in owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.

Past performance does not guarantee future results.

Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.

Diversification does not guarantee a profit or protect against loss.

Systematic investing does not guarantee a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining.

Dividends may be increased, decreased or eliminated at any time without notice.

Special risks are inherent in international investing, including those related to currency fluctuations and foreign political and economic events.