- The SP 500 is down 17% – 18% from it’s all-time-high in mid-February ’25.
- The SP 500 is down -13.53% YTD as of Friday April 4th, 2025’s close.
- The Barclays Aggregate is up +3.64% YTD.
- The 60% / 40% balanced account benchmark return is down -6.6% YTD.
As readers can tell from the drop in the stock market indices on Friday, April 4th, the stronger-than-expected jobs report for March ’25 was ignored.
The next month’s economic data will be almost entirely from March ’25 or “pre-tariff announcement”, with the exception of the weekly jobless claims data. Jobless claims as an economic indicator, may finally get its just due as a timely and current indicator, since the data is typically a week old. For instance, last week’s jobless claims data (released on Thursday morning, April 3rd) was for the week ended March 29th, ’25.
In the next month it’s pretty likely, the weekly and the 4-week moving average of jobless claims will move higher.
It’s difficult enough as it is, to predict how SP 500 earnings will turn out, although reasonable inferences can be made from quarterly and annual GDP data, retail sales, and manufacturing data, etc., but it’s probably no surprise telling readers that while Q1 ’25 SP 500 earnings should actually look pretty good, Q2 ’25 guidance will likely be VERY conservative, and range of guidance provided might be far wider than normal as companies try and figure out both ends of the tariff equation.
- The forward four-quarter estimate (FFQE) jumped $10 last week, as the forward 4-quarter estimate changed from Q1 ’25 through Q4 ’25 to Q2 ’25 through Q1 ’26. The new forward estimate is $278.96 versus last week’s $268.91, for a sequential increase of $10.15.
- The PE ratio as of Friday’s close on the FFQE is a 18.2x.
- The SP 500 earnings yield has jumped to 5.5%. There hasn’t been a 5% handle on the SP 500 earnings yield since the first week of January, ’24.
- High-yield credit spreads rose about 30 bp’s last week from 320 to 350 as of Friday morning, April 4th. The iShares iBoxx Corporate High Yield ETF (HYG) was down 1% YTD. The SHYG (short-maturity high yield) ETF was down -1.5% YTD. No surprise that corporate investment-grade is outperforming high-yield given the great attribution of duration to total return.
- Here’s a look at previous sequential bumps in the FFQE to give readers a little perspective:
- Q2 ’25: $10.15
- Q1 ’25: $9.28
- Q4 ’24: $9.19
- Q3 ’24: $8.54
How have SP 500 sector growth rates changed since early ’25 ?
At the end of 2024, SP 500 EPS expected growth rates were calling for an overall estimated EPS growth for ’25, of roughly 14%, which has now slowed to 10%.
Expect those 2025 sector expected growth rates to decline, both this coming week and through the earnings season, barring any miracle tweet or press release from Oval Office, but more interesting will be what happens with Q2 ’25 SP 500 EPS expected growth rates as we progress through Q1 ’25 earnings releases.
The expected range of outcomes for “forward” SP 500 EPS estimates has widened dramatically in the last week.
Bank earnings begin Friday, April 11th:
JPMorgan (JPM) and Wells Fargo (WFC) report Friday morning, April 11th, before the opening bell, as does Blackrock (BLK), BNY Mellon (BK), and Morgan Stanley (MS).
Only JPMorgan and Morgan Stanley are owned by clients, with JPMorgan being the largest single equity position as of 3/31/25.
Jamie Dimon was looking for an “economic hurricane” in April, 2022, when JPM reported solid earnings, which hasn’t been a great forecast the last 3 years, but Jamie may have finally gotten his hurricane with the tariff tiff.
Here’s the weekly returns for some key financials this past week:
- JPM: -13.41%
- C: -17.35%
- BAC: -16.63%
- WFC: -13.74%
- GS: -13.31%
- MS: -13.44%
- SCHW: -11.25%
- KRE: -12.68%
Goldman (GS), Citigroup (C) and Schwab (SCHW) report next week, beginning April 14th.
This blog will be out with earnings preview for a few financial companies before Friday, April 11th.
Summary / conclusion: The market’s biggest shocks are always from one-off events that have not really been on the market’s horizon, and this tariff policy probably qualifies as one of those events, given the rarity of a macro tariff policy that was so publicly announced. I can’t remember any new trade policy that was as public as the new Administration’s, since NAFTA, which took months to get through the Clinton Administration and Congress.
Part of President Trump’s end-game is the expectation that new tariffs will help bring in $700 – $800 billion new revenue to help the budget deficit, and while it’s not a stated result of the tariff tiff, the likelihood that the Federal Reserve will reduce the fed funds rate if the US economy slows, helps lower the interest expense on the debt, which also helps the budget deficit.
For the President and his new staff, the budget deficit might be the real end game here. (Bill Ackman forwarded an article on X on Friday, by an author I wasn’t familiar with, detailing some of this angle, so check Ackman’s byline on X from Friday, April 4th, to get the perspective.)
Garnering far fewer hyperbolic headlines this week, the President’s tax bill cleared a procedural hurdle late Friday night, which also is tied into this trade / budget negotiation.
European stock markets were hit very hard late last week, along with the US, so that’s one safe-haven or outperforming asset class that has fallen to just 1% YTD returns. While still outperforming the SP 500, the President’s new tariff initiatives will certainly echo around Europe.
It’s hard to say where the bottom is for the SP 500 and Nasdaq. Just be patient.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. Investing can and does involve loss of principal, even over short periods of time. None of the above information may be updated and if updated, may not be done in a timely fashion. All SP 500 EPS and revenue data is typically sourced from LSEG. Readers should get gauge their own comfort with portfolio volatility and and adjust accordingly.