As the stock market comes off a wild week, full of up and down days and severe uncertainty over trade policy. Traders prepared to end the week on a high note. The Dow Jones Industrial Average is up 3.3% for the week, with the S&P 500 up 3.8%, on pace for its best weekly performance since last November. With the Nasdaq leading the way, it is currently on course for a stunning 5.1% week – its best week since a streak of lies in mid-September.
Despite these optimistic numbers, Thursday’s trading session caused most major indices to drop off a cliff. The S&P 500 futures gained 0.2%. At the same time, the Nasdaq 100 futures rose 0.2%, a sign of strength amid the volatility. Along with the trade policy uncertainty, which lingered over all of investor sentiment. As a result, traders fled to “risk-off” assets like gold and US treasuries and started unwinding their positions.
A March producer price index report will be released this Friday. It, together with the preliminary University of Michigan consumer sentiment data for April, should provide helpful confirmation or contradiction as to the direction of market-moving conditions. Investors are watching all of these indicators closely to get a read on the direction tariffs may take economic growth and inflation.
All four of the largest averages took a hit on Thursday, undoing gains accumulated during the short week. Dow dropped more than 1,000 points after that remarkable rise of more than 2,900 points on Wednesday. This drastic decline erased much of these recent gains. As such, traders are constantly on edge and more fearful than ever about where the market is headed.
“Today’s trading has seen a rare, ugly and worrying combination of market moves with the dollar, bonds and equities lower amid renewed volatility and stress cross-asset markets – in spite of a decent enough 30-year Treasury auction,” – Krishna Guha, Evercore ISI strategist.
Additionally, the continued uncertainty about the Administration’s trade policies has spooked investors. Jed Ellerbroek, portfolio manager at Argent Capital Management, warned of the longer-term ramifications of today’s policies.
“This set of policies will leave the U.S. with higher inflation, lower economic growth, and a frustrated stock market.” – Jed Ellerbroek.
Traders are growing louder in their calls for President Donald Trump and his administration to provide some clarity on tariffs. Some argue that a fundamental change in approach would be enough to calm the market.
“But the market is pressing for a bigger U-turn with either a complete cessation of tariffs ex-China, or negotiations with China, or both,” – Krishna Guha added.