Market Volatility: Navigating Trade Wars and Sector Shifts

Fresh news and strategies for traders. SPY Trader episode #1103. Hey everyone, it's your pal Digger McDusty here, and welcome back to Spy Trader! It's 6 pm on Thursday, April 17th, 2025, Pacific time, and boy oh boy, has it been a day! But before we dive in, I have a joke for you. What's a trader's favorite kitchen tool? The stock pot. Get it? Okay, okay, I'll stick to the analysis. So, let's break down what's been moving the markets. While the markets are closed tomorrow for Good Friday, let's recap this week. We saw a bit of a mixed bag on Thursday. The S&P 500 barely eked out a gain, up 0.13%, while the Nasdaq dipped slightly by 0.15%. But the Dow... ouch! It took a tumble, falling 1.33%. And overall, we're looking at a third weekly decline in four weeks for the major indexes, with the S&P 500 heading for about a 1.5% loss this week. Sectorwise, it's been a real hodgepodge. Energy had a good day on Thursday, jumping 3% and giving the S&P 500 a boost. Chip stocks bounced back a bit, thanks to Taiwan Semiconductor Manufacturing, or TSMC, reporting strong earnings, but there's still some nervousness in the air about trade stuff and potential demand slowdown. On the flip side, remember back on March 31st how Energy and Healthcare were crushing it in Q1? Seems like things are constantly shifting these days. Now, what's been causing all this market craziness? Well, a big part of it is the ongoing trade war and onagain, offagain tariff threats. Fed Chair Jerome Powell even mentioned that these tariffs are likely to slow growth and increase inflation. The Fed seems to be taking a 'waitandsee' approach before messing with interest rates, which makes sense. We also had some big companyspecific news. Eli Lilly popped 14% after some promising weightloss pill results. UnitedHealth, however, got hammered, down 19% on Thursday, after a notsogreat outlook, and that dragged the Dow down with it. Alphabet also took a hit after losing a legal battle about online advertising. Nvidia is dealing with a hefty $5.5 billion charge because of those restrictions on AI chip exports to China. And Netflix is up a bit ahead of their earnings report. So, you see, lots of moving parts! Looking ahead, the US economy is expected to slow down a bit this year, and that trade stuff could make it even worse. Inflation is probably going to creep up, and while the unemployment rate has been holding steady, a slowdown could change that. Consumers and businesses are feeling a little less optimistic because of the uncertainty. So, what's a trader to do? Well, buckle up, because we're in for a volatile ride. Given all the policy changes that are happening, now is a good time to diversify your portfolio and have exposure to various sectors. Morningstar is still recommending being overweight in value stocks and maybe look at extending the duration of bond portfolios. And keep a close eye on those trade developments. They can change market sentiment in a heartbeat. While a recession isn't my base case, it's always good to be prepared for a slowdown. I think this environment might actually favor active management, where good investment managers can really pick out the winners from the losers. That's all for today's Spy Trader. Enjoy your Good Friday, and I'll catch you next time! Remember, always do your own research, and don't let the market drive you nuts. Digger out!