In Markets "In a Nutshell"

Markets “In a Nutshell” for April 14, 2025

Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 5.0%, the S&P 500 was up 5.7%, and the NASDAQ rose 7.3%. Foreign stocks (MSCI EAFE) were down, falling 0.9%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.47%.  (Data source: Wall Street Journal)

Tariff Timeout

Last week a 90-day pause was put on tariffs that after the S&P 500 had dropped 12% from April 3rd – April 8th. The other worry was the bond market was showing major signs of weakness as well as the U.S. dollar. This led to a 90-day pause in tariffs except for China as the trade war with them continues. This unexpected pause on tariffs sent markets higher as the administration says they have heard from over 75 countries looking to negotiate. This took the pressure off markets as the tariff policy continues to change and be the headline for markets as investors attempt to price in the updated policy.

Extreme Volatility Historically Leads to Strong Returns

Although the volatility we have seen the past few weeks is never fun to experience, historically it does mean strong returns in the following 6 & 12 months. The volatility index, also known as the VIX, has gone above 43 eight times in the past 35 years with this being the 8th. The average 6-month return following a VIX greater than 43 is 12%, and the average 12-month return was 20%. It also took an average of 8 months for the VIX to return to average levels. Although volatility is never good, it typically means people may be panicking and making decisions based on fear. This past week goes to show why timing the market is typically a bad strategy, and investors should stick to their long-term plan and investment strategy.

Nvidia to Mass Produce Supercomputers in Texas

As the tariff policy continues to change and companies adapt, Nvidia is trying to mitigate the risk by producing in the United States. The company is planning to produce up to $500 billion of AI infrastructure in the next 4 years on American soil. This continues the move to American manufacturing we have seen this year as companies attempt to avoid tariff risk going forward. Although this will take time to play out, this could let the current administration give more exemptions if companies are proving to manufacture in the United States. (CNBC)

Quiz:

What is the return for the MSCI EAFE index? (Scroll Down for Answer)

  1.    -12.2%
  2.    -6.7%
  3.    1.6%
  4.    4.9%

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

Answer:

3.   1.6%. Foreign markets continue to outperform the U.S. markets. Despite the recent downturn, foreign markets remain positive for the year.

 

 

 

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