Weekly Digest - April 7th
Over the past week, the S&P 500 has experienced significant volatility, primarily triggered by President Donald Trump’s announcement of sweeping tariffs on imports from nearly 90 countries. The index declined approximately 10% over the past week and 14% in the last three trading sessions, putting it on course for its largest percentage decline since the Black Monday crash of October 1987.
According to JP Morgan, the U.S. economy is projected to fall into recession this year, factoring in the economic shock from the newly announced tariffs. Investor sentiment remains weak, reflected in falling oil prices, a global stock sell-off, and increased demand for safe-haven assets like gold and silver. When questioned about the market instability, President Trump remarked, “I don’t want anything to go down. Sometimes you have to take medicine to fix something”.
While the immediate outlook appears grim, seasoned investors know that volatility often brings opportunity. Peter Lynch, one of the most successful fund managers in U.S. history (with a CAGR of 29%), once said that the market will always fluctuate and that volatility is a friend, not a foe, if you know what you own. For investors with a long-term perspective, now could be the right time to accumulate quality stocks at attractive valuations and benefit from dollar-cost averaging.
Our Take on the Impact of Tariffs and Market Decline
More than $5 trillion in investor wealth has been wiped out recently. However, our experts at Streamlined Finance believe the market may be overreacting to fear and that the actual economic damage could be lower than anticipated.
A slowdown was already in the cards, as indicated by the Atlanta Fed GDPNow tracker, which had signalled a potential decline in economic growth as early as February 2025.
Our analysis suggests that the newly imposed tariffs could result in a GDP decline of only 1.26%, equating to a loss of around $296 billion, less severe than market sentiment may suggest.
Tariff Effect Calculation: Real GDP for Q4 2024: $23.542 trillion
Total Imports for 2024: $3,295.6 billion
Tariff increase: 11.5 percentage points (the total effective tariff rate is now at 22.5%, the highest since 1909)
Formula:
GDP impact (%) = A x T x (M/Y) x 100
= 0.4 x 0.225 x (3.3T / 23.5T) x 100
= 1.26%
Markets may be bottoming out, with signs of a potential rebound.
Top Gainers This Week
In a falling market, First Solar (NASDAQ: FSLR) is one of the rising stocks, with the company recording an approx. 3% gain in the past week. With rate cuts likely on the horizon, cheaper financingcould boost demand for solar panels, which are often bought on credit.
Dollar General (NYSE: DG) rallied approximately 5%, boosted by stronger-than-expected Q4 earnings and a stock rating upgrade from Melius Research (from Hold to Buy) with a target price of $110. The company’s valuation also appears attractive.
Top Losers This Week
Various individual stocks have declined significantly in the past week, with those involved in operations and imports from China, impacted the most by the Trump administration’s high tariffs.
Western Digital (NASDAQ: WDC) and Seagate (NASDAQ: STX) declined 23% and 20%, respectively, amid supply chain concerns and fears of Chinese retaliation.
Other companies such as Nike (NASDAQ: NKE) and Lululemon (NASDAQ: LULU) having high imports and manufacturing in countries such as China, Japan, the Philippines, and Vietnam have also seen sharp declines.
What should you do?
In the short term, volatility will persist, and economic uncertainty will likely continue. However, long-term investors should stay calm, patient, and strategic. Focus on fundamentally strong stocks trading at attractive valuations. Now is the right time to selectively build your portfolio, leveraging periods of panic to buy quality stocks at a discount.