Weekly Update: Trade Policy Developments

Jack Brown, CFA & Casey Farrow

April 21, 2025

Weekly Market Update

April 21, 2025

Outlook

Similar to the S&P 500 Index, the Russell 3000 Index is a broad index of stocks and is weighted by size. In other words, both indices are constructed similarly, with large companies having a larger representation than smaller companies. The big difference, in our view, is that the Russell 3000 is comprised of approximately the largest 3000 U.S. stocks, whereas the S&P 500 is essentially 500 stocks. Either way, both perform somewhat similarly given the weighting scheme. On the other hand, the Russell 3000 includes around 2500 more companies that are smaller than the S&P 500 companies.

Today, the Russell 3000 Index is down approximately -15% from its high, and therefore the market is in "correction" territory (vs. a bear market, which is generally accepted to be more than -20% off high values). However, when we look at the individual stocks in the Russell 3000 index, we can study how the typical company's stock is performing. So, looking at the 3000 companies, how is the typical stock performing? The median percent-off-high is -53% according to our analysis collected from our data source, YCharts. This means at least half the stocks are down more than -53% off their own high values. This is historically significant and is approximately the same as March 2020, when Covid panic selling occurred, but not quite as stretched as the Global Financial Crisis (2009).

In our view, this offers a clue that there are many bargains from a value perspective. At some point, very good companies that have been oversold will entice investors to purchase these companies.

. . .

The U.S. equity market posted modestly lower in the prior holiday-shortened week. Market volatility was once again driven by tariff developments and monetary policy commentary.

U.S. President Trump and other officials have made positive public statements regarding progress towards trade negotiations with multiple countries, except for China.¹ Instead, the U.S. government added new restrictions on exports of chips to China. The move put pressure on large U.S. semi companies like NVDA and AMD.² The update, along with a weak quarterly bookings performance from ASML (the Dutch chip giant), led to a broader tech slide and contributed largely to the week’s overall market losses.

In addition, comments from Federal Reserve Chairman Jerome Powell appeared to add to market sentiment. Powell spoke at the Economic Club in Chicago on Wednesday, reiterating an economic outlook similar to those recently shared by other Fed officials.

Powell noted that despite heightened uncertainty, the U.S. economy is still in a solid position, with the labor market at or near maximum employment and inflation at more modest levels running a bit above its 2 percent target.

Regarding tariffs, Powell expressed concerns about their likely higher-than-anticipated effects, including at least a temporary period of higher inflation and slower growth. Tariff policies are still evolving, and their effects on the economy remain highly uncertain. Nonetheless, Powell affirmed that policymakers are “well-positioned to wait for greater clarity before considering any adjustments” to their policy stance. The futures market interpreted Powell’s hawkish stance as ruling out any interest rate cuts in the near term.³

For the week, the S&P 500 finished down -1.5%, the blue-chip Dow fell -2.7%, and the tech-heavy Nasdaq slid -2.6%.

[1] Trump tariff deals coming, not recession: Hassett

[2] U.S issues export licensing requirements for Nvidia, AMD chips to China

[3] CME FedWatch - CME Group

Upcoming Reports

Monday: N/A

Tuesday: FOMC Members Harker and Kashkari Speak

Wednesday: Manufacturing and Services PMI

Thursday: Durable Goods Orders

Friday: Michigan Expectations and Sentiment

Market Performance Stats

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