Stocks Rally in Roller Coaster Week

Equity markets rallied after the administration put a pause on the reciprocal tariffs announced the week prior. Despite having a strong week, stocks were highly volatile on a cloudy outlook. Overall, for the week global equities (represented by the MSCI All Country World Index) finished up 3.5% while domestic stocks (represented by the S&P 500 Index) were up 5.7%.

U.S. Treasurys

U.S. Treasurys were notable last week as yield rose (meaning bond prices dropped) across the yield curve. Even though the expectation is still for 2-4 rate cuts this year from the Fed, rising government bond yields show the level of market anxiety related to fiscal conditions.

Consumer Price Index (CPI) Report

Inflation remained well-behaved for the March 2025 report. The Consumer Price Index (CPI) report released last week showed that headline CPI (which includes energy and food) dropped to 2.4% year over year while the core index (removing energy and food) dropped to 2.8%. Both were sizable drops.

Corporate Earnings

You can expect a slew of corporate earnings over the course of the next few weeks. Per usual, major banks have led off earning season and so far, so good. The expectation is for Q1 earnings to remain a positive note for markets, but the cloud of future guidance remains a concern. Strong earnings have been a core piece of market returns for the last couple of years.

Strength of US Dollar

One of the data inputs we look at for our weighting to international stocks is the strength of the US dollar. Over the course of the last couple of weeks, the dollar has meaningfully depreciated. While it’s still such a short time period, it makes sense why you’ve started to hear more headlines pushing for owning foreign equities.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Author

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

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