April 14, 2025

In another astounding session, the second one last week, the market started out lower and then ended with an upside world wind to finish the week higher after all of the downside misery that investors have seen lately.

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But let it be remembered that the ongoing  falling value of the U.S. dollar and other swings in financial markets suggested fear is still high about escalations in the President’s trade war with China.

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As an example of these wild swings, the Dow got as low as a decline of 340 to a gain of 810 before finally ending with a closing advance of 619 to 40,212 as it was led for a change by some of the recently beaten-down former high technology leaders such as AAPL, MSFT, NVDA and AMZN.

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The S&P was lower by 43 before it too underwent a tremendous upside reversal to finish 95 points higher to 5363, and here the leaders were the high technology stocks for the second day this week as well. It had its best weekly gain since 2023, rising by 6%.

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The Nasdaq also made a huge gain after early losses to end higher by 337 up to 16,724 led by you know who and even the beaten-down Russell 2000 Index of small stocks got dragged along to the upside by 28 to 1860 while the VIX got dragged lower to 37.56

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Stocks kicked higher as pressure eased a bit from within the U.S. bond market as the yield on the 10-year Treasury topped 4.58% in the morning, up from 4.01% a week ago. That is a major move for a market that typically measures things in hundredths of a percentage point. Such jumps can drive up rates for mortgages and other loans going to U.S. households and businesses, which would slow the economy, and they can indicate stress in the financial system.

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But Treasury yields eased back as the afternoon progressed, and the 10-year yield eased back to 4.48%. That is still higher than the day before, but not as vivid as before.

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Susan Collins, president of the Federal Reserve Bank of Boston, told the Financial Times that the Fed “would absolutely be prepared” if markets become disorderly and “does have tools to address concerns about market functioning or liquidity should they arise.”

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Several reasons could be behind this week’s jump in U.S. Treasury yields, which is unusual because yields typically fall when fear is high.

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Investors outside the United States could be selling their U.S. bonds because of the trade war, and hedge funds could be selling whatever is available in order to raise cash to cover other losses. More worryingly, doubts may be rising about the United States’ reputation as the world’s safest place to keep cash because of Trump’s frenetic, on-and-off tariff actions.

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The value of the U.S. dollar also fell again Friday against everything from the euro to the Japanese yen to the Canadian dollar.

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What did live up to its reputation as a safer haven for investors, namely gold, saw its price rise to another record at over $3,100 an ounce.

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The shaky trading came after China announced on Friday that it was boosting its tariffs on U.S. products to 125% in the latest tit-for-tat increase following Trump’s escalations on imports from China.

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The repeated U.S. tariff increases “on China has become a numbers game, which has no practical economic significance, and will become a joke in the history of the world economy,” a Finance Ministry spokesman said in a statement announcing the new tariffs. “However, if the US insists on continuing to substantially infringe on China’s interests, China will resolutely counter and fight to the end.”

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Rising tensions between the world’s two largest economies could cause widespread damage and a possible global recession, even after Trump recently announced a 90-day pause on some of his tariffs for other countries, except for China.

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All the uncertainty caused by the trade war is eroding confidence among U.S. shoppers, which could affect their spending and translate into damage for the economy, which came into this year at a solid rate.

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A preliminary monthly survey by the University of Michigan suggested sentiment among U.S. consumers is falling even more sharply than economists expected. “This decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region, and political affiliation,” according to the survey’s director, who noted that it fell to 50.8 and inflation expectations rose to 6.7%, which was the highest since 1981.

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Friday’s swings came after a set of stronger-than-expected profit reports from some of the biggest U.S. banks, which traditionally help kick off each earnings reporting season.

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JPM, MS and WFC all reported stronger profit for the first three months of the year than analysts expected. The first two rose while the last one declined.

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The March P.P.I. came in lower than expected at -0.4%, which was due to the sharp decline in oil prices and up by 2.7% year over year. Excluding food and energy it was down by -0.1% and higher by 3.3% for the year. That could give the Federal Reserve more leeway to cut interest rates if it feels the need to support the economy.

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But Friday’s report on inflation at the wholesale level was backward looking, measuring March’s price levels. The worry is that inflation will rise in coming months as Trump’s tariffs make their way through the economy. And that could tie the Fed’s hands.

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In stock markets abroad, indexes were scattershot around the world. Germany’s DAX lost 0.9%, but the FTSE 100 in London added 0.6% as the government reported that their economy, the world’s sixth largest, enjoyed a growth spurt in February. Japan’s Nikkei 225 dropped 3%, while Hong Kong’s Hang Seng climbed 1.1%.

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Earnings this week will see: today – GS; Tuesday – BAC, C, IBKR, JBHT, UAL, PNC and Dow component JNJ; Wednesday – Dow component TRV plus AA, CSX, ABT USB; Thursday – Dow components AXP, UNH plus BLK, SCH, NFLX.

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Economic reports will have: Wednesday – March retail sales, March industrial production and capacity utilization; Thursday – weekly jobless claims, March housing starts.