Our latest episode focuses on the market rally that occurred on Wednesday after the Trump Administration announced a 90-day pause on most tariffs. The S&P 500 closed Wednesday up 9.52%. Watch as Gary Quinzel, Vice President for Portfolio Consulting focuses in on fiscal policy and investor sentiment as he explains the market movers at play.
If you have any questions about how the current economy and market environment could affect your financial plan, reach out to a Wealth Enhancement advisor today.
EPISODE TRANSCRIPT:
Hello, everyone. Welcome to this edition of the seven market movers. My name is Gary Quinzel, Vice President of Portfolio Consulting at Wealth Enhancement.
Today, I'm going to focus on just two of the market movers, one being fiscal policy, most notably tariffs, which have been top of mind lately for everyone, as well as investor sentiment, which took a a notable positive spin, on Wednesday, as we, had the biggest update in the market since March of 2020.
The day started a little back and forth, but the first positive development occurred when we had a better-than-expected treasury auction. Essentially, what that meant is that a lot of buyers showed up to buy ten-year treasuries, which was the opposite of what had just happened with the three-year treasury auction the day previous.
That basically suggested that there's no buyer strike yet, and it calms some nerves in the market. So that was certainly a positive development. But more importantly, around 1:00 PM eastern, president Trump announced that roughly seventy five countries that had not retaliated against the US with their own tariffs, but yet had come to the negotiating table or indicated that they were willing to do so, would receive a 90-day pause on the reciprocal tariff rate previously announced and instead would only get the 10% baseline tariff. And so, the market very positively received that news.
The one notable exception to that policy, of course, is China. China has retaliated, and, of course, there's been some back and forth there. The latest tariff on China has been lifted to 125% and China's tariff on the US up to 84%. And unfortunately, you know, it appears that this could continue on for some time. So certainly more to come on that story. But the good news for the market was, as I mentioned, we had the strongest update, in quite some time. I mentioned the S&P 500 hundred, having its best day. It rose around 9.5% up over 5,400.
The Dow Jones Industrial Average climbed 2,900, just a huge number, up around 7.8%. We saw the Nasdaq go up around, 12% driven by a lot of those big MAG Seven names. Of course, they're in the S&P 500 as well, but things like Apple and Nvidia and Microsoft, Amazon, Meta, etcetera, all those big tech stocks had very big days. And so it was definitely a risk on rally.
We saw a big price appreciation in things like gold, up around 3%, biggest day since 2023. We saw oil bounce off its four-year low, up around 4.7%. And even some assets like cryptocurrencies like Bitcoin also had strong days.
On the yield, on the fixed income side of things, I mentioned, the better-than-expected treasury auction. Yields had been falling. Bonds had been rallying at the start of this kind of equity sell off. But the last couple days, we did see a bond yield back up. In fact, we saw the ten-year, yield goes actually go higher than 4.5% overnight, prior to falling back down to around 4.34% the day of the auction.
And so, one reason that we're actually seeing some leveling off of some of the yield moves is that we're seeing some of the unwinding of some of those basis trades that Doug Huber, my colleague, mentioned the other day. That that is the highly levered arbitraging of the difference between the cash and the futures price of treasury securities. And so, some of these highly levered market movers have definitely been exacerbating the market moves that we've been experiencing, certainly causing a lot of more fear and more uncertainty when we see these giant swings in equity and in fixed income. And, unfortunately, it's some of these moves are likely going to continue, as the uncertainty, you know, prevails. And so we are certainly not out of the woods yet. We are certainly slightly more optimistic when we hear the news, such as what Treasury Secretary Scott Bessett mentioned that he believes many countries are going to come to the table and start negotiating.
But, we still have to wonder what's going to happen with, our one of our biggest trading partners, China. One example came out the other day about the potential cost of iPhones, as reported by the Bank of America analyst that the cost could go up as much as 90% per that analyst, if they were produced here in the US. Now, obviously, that's just one product, one example, but it's pretty symbolic of what, you know, the typical, US consumer could experience, if those tariffs were actually implemented on a more permanent basis. So certainly much more to come on that regard.
But for one day at least, it was certainly welcome to get some positive news. And as always, we just highly encourage our clients to stay calm out there, as best you can. Don't let your emotions drive your financial decisions. As we always talk about, you know, missing just a few big up days in the market can have a very detrimental long-term impact on your overall long term market performance.
So staying invested is typically the best course of action. Stay disciplined, stay diversified. And if you have any questions, please, reach out to your financial adviser. That's all for today.
Stay tuned for future updates. Thank you all, and have a great day. Take care.
This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances. Investing involves risk, including possible loss of principal.
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