MARKET UPDATE
Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Nicole Brown-Griffin, CFP®, CDFA®, EA
Aaron Petty, Client Associate
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Market Check-In: Powell Spoke, Volatility Lingers
Following the Markets: Powell Weighs In
Last week was packed with headlines, from renewed tariff tensions to a closely watched speech by Federal Reserve Chair Jerome Powell on Wednesday. While not a formal Fed policy meeting, Powell’s remarks at the Economic Club of Chicago drew significant market attention, and for good reason.
Powell’s Key Message?
The Fed plans to hold interest rates steady, but remains cautious as it assesses the ripple effects of recent tariff actions. Powell acknowledged early signs of softening in U.S. economic growth, particularly as consumer spending begins to moderate. Although the 90-day pause on most tariffs provides short-term clarity, he emphasized that longer-term consequences are still unfolding and could prove more disruptive than originally expected.
He also warned that tariffs, especially those targeting autos and Chinese imports, are likely to fuel inflation and strain the labor market. These added costs often trickle down to consumers, potentially weakening overall demand.
Markets Responded Quickly
After Powell’s speech on Wednesday, the S&P 500 fell 2.8%, Treasury yields declined, and the dollar weakened. He pushed back on the idea of a “Fed put,” the notion that the Fed would step in to cushion markets, reaffirming instead the central bank’s commitment to long-term price stability, even amid short-term volatility.
Still, markets showed resilience as the week wrapped up. Despite a notable earnings miss from UnitedHealth Group that weighed on the Dow, broader indices rebounded on Thursday ahead of the market holiday. With U.S. markets closed Friday in observance of Good Friday, it was a shortened trading week. Notably, the Russell 2000 index, which tracks smaller companies, rose 1.1% for the week, signaling strength in small-cap stocks. Meanwhile, the VIX, Wall Street’s fear gauge, fell more than 9% on Thursday and over 30% across the last five trading days, suggesting a meaningful easing in investor anxiety.
Powell also used his remarks to highlight rising concerns about the U.S. deficit. He noted that cutting discretionary spending alone won’t solve the problem and stressed the need for long-term, bipartisan reforms addressing Social Security, Medicare, Medicaid, and ballooning interest payments.
What Does This Mean for Investors?
It reinforces what we’ve been emphasizing: while markets have bounced back in recent days, the road ahead may remain uneven. Powell’s tone suggests that rate cuts aren’t guaranteed anytime soon, and inflation, tariff-driven or not, remains a central concern.
As always, our priority is to stay steady and focused. We’re tracking the data, reassessing portfolio allocations, and keeping in close contact with our institutional research partners. We’re prepared to make any necessary adjustments, but always with your long-term plan in mind.
We hope you had a restful holiday weekend.
Your Team at Wealth Avenue,
