AFM Weekly Update

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Week of Mar. 31 through Apr. 4, 2025

The S&P 500 lost 9.1% this week amid worries about the impact of US President Donald Trump's reciprocal tariffs on global economic growth and inflation.

The S&P 500 ended Friday's session at 5,074.08 after falling 5.8% in March. Its Q1 drop is now at 4.6% and the index is down 13.7% since the start of the year.

The US imposed 10% blanket tariffs on all countries that will take effect Saturday and additional duties on specific trading partners including China and Japan. Tariffs on Canada and Mexico, the US's largest trading partners, had previously been announced. Chinese goods imported into the US will face a 54% tariff rate starting April 9.

China plans to impose an extra 34% tariff on US goods starting April 10.

The escalating trade war has raised concerns about a possible global recession. Beijing will also limit exports of key rare-earth minerals and placed 11 US companies on an "unreliable entity" list.

Data this week showed the US goods and services deficit narrowed more than projected in February to $122.7 billion, according to the US Census Bureau and the Bureau of Economic Analysis. The deficit declined $8 billion from $130.7 billion a month earlier.

The March employment report showed nonfarm payrolls rose by 228,000, well above the 140,000 jobs increase expected in a survey compiled by Bloomberg. However, February payrolls had a downward revision to a 117,000 increase and January payrolls were revised down to a 111,000 increase, for a net downward revision of 48,000 jobs. The unemployment rate rose to 4.2% in March from 4.1% in February, compared with a 4.1% rate expected.

All sectors of the S&P 500 were in the red. Energy had the largest percentage drop, sliding 14%, followed by 11% decline in technology, a 10% loss in financials and a 9.4% decrease in industrials.

In energy, APA (APA) was down 27%. Capital One adjusted its price target on the company's stock to $35 from $38 and kept an overweight rating on it. Wolfe Research also reduced its price target on APA to $36 from $40 and kept an outperform rating on it.

Among technology stocks, Micron Technology (MU) fell 26%. Investors worry that US grant recipients in the microchip industry, including Taiwan Semiconductor Manufacturing (TSM), Intel (INTC), Micron Technology, GlobalFoundries (GFS), and Texas Instruments (TXN), face pressure to expand domestic operations or risk losing funding.

KKR (KKR) was among those hit hardest in the financials sector, falling 19%. The private equity firm, along with EQT (EQT) and FTV Capital, led a $500 million funding of ReliaQuest. The fresh capital will finance the expansion of AI-powered cybersecurity automation platform and drive international growth, ReliaQuest said.

Next week, the Q1 reporting season will kick off with reports expected from companies including JP Morgan Chase (JPM), Wells Fargo (WFC), Progressive (PGR), BlackRock (BLK), Constellation Brands (STZ) and Delta Air Lines (DAL).

Economic data will include February's consumer credit report and March's consumer and producer price indexes.

Provided by MT Newswires.