Volatility returned last week due to trade tensions and a sudden geopolitical shock, even though economic data showed moderating growth and lower inflation.
Investors digested a fragile U.S.–China trade truce, a steady but slowing labor market, and an escalation in the Israel–Iran conflict that sent safe-haven assets soaring. In this commentary, we break down the key developments, from Washington to the Middle East, and discuss what they mean for markets, interest rates, and long-term investors.
Market Commentary 4/23/25
Equity markets were relatively unchanged this past week, with the S&P 500 finishing flat after giving back early gains spurred by news that the U.S. would temporarily exempt certain tech products from new China tariffs.
The Nasdaq declined 0.5%, weighed down by weakness in the “Magnificent 7” and broader technology sector following last week’s relief rally. High Beta and Growth stocks underperformed, while Low Volatility, Value, and Equal Weight indexes led on a relative basis.
Despite the S&P 500’s flat performance, most sectors outpaced the index, as underperformance from mega-cap Consumer Discretionary, Technology, and Communication Services sectors dragged on returns.
In fixed income, Treasury yields pulled back from last week’s spike, giving a lift to long-duration maturities. Corporate bonds also advanced, supported by tightening credit spreads.
Market volatility declined, with both the CBOE VIX and MOVE indices trending lower, reflecting easing uncertainty across equity and bond markets. International equities continued to outperform, bolstered by a weakening U.S. dollar as money continued to rotate out of U.S. assets.
Market Insights & Implications
Historic Daily Moves Reflect Market Whiplash
Wednesday, April 9 marked one of the strongest single-day rallies for the S&P 500 since 2000, driven by the tariff pause. This spike now ranks as the third-largest gain of the past two decades.
In our last commentary, we discussed the importance of not missing the largest up days in the market. Interestingly, many of the largest up days overlap with major down days, underscoring the difficulty of market timing during periods of elevated volatility. This highlights the importance of staying invested during turbulent markets.
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The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock’s weight in the Index proportionate to its market value.
The CBOE Volatility Index® (VIX®) shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
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Market Commentary 6/18/25
Volatility returned last week due to trade tensions and a sudden geopolitical shock, even though economic data showed moderating growth and lower inflation.
Investors digested a fragile U.S.–China trade truce, a steady but slowing labor market, and an escalation in the Israel–Iran conflict that sent safe-haven assets soaring. In this commentary, we break down the key developments, from Washington to the Middle East, and discuss what they mean for markets, interest rates, and long-term investors.