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It has been an historical week for the market, as all indexes have entered a Bear Market.
Year-to-Date Returns (as of April 10th, 3:00 pm, 2025)
- S&P 500: (-9.95%) Bear Market
- Nasdaq Composite: (-14.73%) Bear Market
- Dow Jones Industrial Average: (-6.61%) Correction
- S&P 500 Equally Weighted: (-8.37%)
- Russell 2000 (Small Cap Index): (-17.28%) Bear Market
- Gold: +18.7%
Are Tariffs the market bomb, or just the fuse?
Last week Trump rolled out a sweeping Tariff plan, sending shockwaves through the market, that continued through the end of the week. Monday, we saw a huge swing in the market. It opened down over 1000 points, “fake news” of Trump halting the Tariffs caused the market to rebound from being down 4.7% to up 3.3%, an unprecedented swing.
The volatility continued Tuesday, as the market opened strong, only to give up all its gains and close lower. If you pay attention to headlines, you probably think the market collapse is the result of tariffs., and that is reasonable. However, we think the Tariffs were more of a flame that lit a fuse to the powder keg.
Tuesday, OmniStar president, Phil Clark, sat down in our studio to record our latest episode of “We’re talking Money” where he did a great job explaining how we got here, and it’s not tariffs. You are encouraged to watch if you want to be better informed. Click Here to watch the video. Basically, the economy has been artificially inflated since 2010, when Federal Reserve Chairman Ben Bernanke rolled out the first version on quantitative easing. Bernanke, and then President Obama relied on something they coined, “Escape Velocity”. They reasoned that we would grow our way out of a bad economy. Instead, we inflated assets, such as the market, housing and even collectibles. The market has been overpriced, with Price to Earnings ratios near 30, well above historical averages. We’re Talking Money does a great job explaining this in detail.
Bear Market:
All major indexes, except the DJIA, are lower by 20% or greater, which is the definition of a bear market. The technical indicators confirm market weakness and show signs of continued volatility. The VIX, the volatility index, has been on a wild ride as well, and currently trades around 43. Anything above 20 is said to be \=an indication of market volatility.
10 Year Treasury:
Fixed income has not been immune to the market movements. When the Tariffs were announced, investors piled into the safe haven of the 10Yr Treasury, driving the yield down below 4. If you already owned the 10Yr you saw a nice increase in the market value of your holdings. This week, there has been a huge move to cash, for investors and corporations, and to raise cash they sold assets that were inflated, the 10Yr treasury, which has sent yields soaring to approximately 4.37% as of this writing. That is a monumental move in such a short time frame.
Gold:
Gold was also caught in the crosswinds of the market moves, dropping from $3127/oz on April 4th to a low of $2959/oz on April 7th. It rebounded to $3083/oz as of this writing.
How to Navigate:
Wild rides are not unusual when it comes to investing. However, recent sessions are testing the nerves of seasoned investors around the globe. This environment reminds us that diversification never goes out of style. It also reminds us that planning is a step that should not be ignored. Remember an adage that still holds true, it’s not about timing the market, it’s all about time in the market.
Your OmniStar Investment Team
