Market Data as of Week Ending: 4/18/2025 unless noted otherwise
Stock prices were mixed during the holiday-shortened week as volatility remained elevated off the highs experienced in the prior week. Contributing to the volatility was an announcement from the Trump administration that the U.S. government would add new restrictions on exports of semiconductor chips to China, escalating trade tensions between the world’s two largest economies. Investor sentiment pivoted back to traditionally riskier assets as small and mid-caps outperformed their larger-sized peers. From a style perspective, investors rotated back toward a preference for value relative to growth across all three size segments. Real estate, energy, and consumer staples were the best-performing sectors, all benefiting from more stable interest rates and commodity markets. Six of the major economic sectors declined, with notable weakness in growth-oriented sectors such as information technology, consumer discretionary and communication services. Foreign stocks delivered strong results for both developed and emerging markets.
U.S. Treasury yields stabilized despite comments from Fed Chair Powell acknowledging that unemployment will likely increase as the economy slows, and inflation will likely increase because of new tariffs. The 10-year Treasury yield decreased by 0.14%, ending the week at 4.34%. The 2-year Treasury yield also decreased by a similar amount (0.15%), ending the week at 3.81% and effectively holding the 2-10 spread just over 0.5%. Longer duration bonds outperformed, and high yield was once again the best-performing segment in the bond market as credit spreads narrowed. Investment-grade corporate bond yields and high-yield bond yields finished the week lower at 5.35% and 8.30%, respectively.
Economic data was mixed with sentiment and higher interest rates weighing on the housing market, but no signs of capitulation for the consumer. Retail sales came in better than expected, with a gain of 1.4% in March (+4.6% y/y), with notable gains in categories that will likely be affected by tariffs, such as motor vehicle sales and parts (+5.3%) and building materials and garden equipment (+3.3%). However, areas that are less impacted by tariffs also showed strong results, such as food services & drinking places (+1.8%). Industrial production came in lower than expected, with a decline of -0.3% in March (+1.3% y/y), and capacity utilization declined to 77.8% despite an increase in the manufacturing sector. Homebuilder sentiment remains low and is likely impacting housing starts that came in lower than expected at an annualized rate of 1.32 million, marginally higher than the five-year low of 1.26 million back in July 2024. Initial jobless claims came in better than expected at 215,000, with a four-week average of just over 220,000. However, continuing claims increased to 1.84 million and are near the three-year high of 1.89 million.