Stock futures took a downturn on Sunday evening, April 20, 2025, following what has been another challenging week for Wall Street. The S&P 500 futures pulled back by 0.5%, while the Nasdaq-100 futures also dropped 0.5%. Futures associated with the Dow Jones Industrial Average experienced a significant decline, tumbling 214 points, which also represents a 0.5% decrease. These movements come after each of the three major averages logged a third weekly decline in the last four trading weeks.
Although the S&P 500 managed to close out Thursday's session higher, it still finished the holiday-shortened week 1.5% lower overall. Additionally, both the Dow Jones Industrial Average and the Nasdaq Composite ended the week with more than a 2% pullback over the four-day period. Notably, the U.S. stock market was closed on Friday, April 18, 2025, in observance of Good Friday.
A major contributor to the market's struggles was a sell-off in shares of UnitedHealth, which plummeted more than 22% after the insurer cut its full-year forecast and released disappointing quarterly results on Thursday, April 17, 2025. This downturn was compounded by a nearly 3% loss in Nvidia shares on the same day, following an almost 7% decline in the previous session. Nvidia disclosed on Tuesday, April 15, 2025, that it would record a quarterly charge of approximately $5.5 billion due to new controls around exporting its H20 graphics processing units to China and other destinations.
Market sentiment was further impacted by ongoing concerns surrounding President Donald Trump's tariffs. Over the weekend, Chicago Federal Reserve President Austan Goolsbee warned in a CBS interview that these tariffs could lead U.S. economic activity to "fall off" by the summer. This sentiment follows Fed Chair Jerome Powell's remarks on Wednesday, April 16, 2025, where he expressed that the president's levies could pose challenges for the central bank in managing inflation and promoting economic growth.
Despite the current turbulence, some analysts on Wall Street are cautiously optimistic, suggesting that the worst may be behind us. Mike Dickson of Horizon Investments noted that "perpetual" swings in the market might become less frequent, even if volatility remains a factor. He stated, "Continued uncertainty will likely cap stock market valuations and weigh on investors until greater clarity emerges." Dickson believes that the roughly 10% daily and weekly market swings seen in recent weeks are likely over for now.
Looking ahead, investors are preparing for a crucial earnings week, with over 100 S&P 500 companies set to report their earnings in the coming days. This includes major players like Alphabet, Tesla, and aerospace giant Boeing.
In a separate yet equally significant development, China has decided to keep its benchmark lending rates steady, maintaining this decision for the sixth consecutive month as of April 21, 2025. The one-year loan prime rate (LPR) was held at 3.1%, while the five-year LPR remained unchanged at 3.6%. This decision aligns with market expectations and highlights a cautious approach by Chinese policymakers amid ongoing economic challenges.
Stronger-than-expected economic growth data from the first quarter may have eased the urgency for immediate monetary easing. China's gross domestic product (GDP) grew by 5.4% in the first quarter, surpassing expectations. However, analysts caution that a downturn may be looming, particularly due to U.S. tariff policies that pose significant risks to the Chinese economy.
In a recent Reuters poll of 31 market participants, 27, or 87%, anticipated no change to either of the lending rates. The steady LPR suggests that policymakers are in a wait-and-see mode, as noted by Xing Zhaopeng, a senior China strategist at ANZ. He remarked, "The impact of tariffs is mainly on exports. Given the sound economic growth in the first quarter, it may be easier to introduce targeted measures for export companies."
Economists at ING added that the LPR is unlikely to shift without a prior cut to the seven-day reverse repo rate. They emphasized that low inflation and strong external headwinds amid escalating tariff threats provide a compelling case for easing, though currency stabilization considerations may compel the People's Bank of China to delay action until the U.S. Federal Reserve cuts borrowing costs.
As Asian equities and U.S. stock futures slid on Monday, April 21, 2025, the dollar also weakened, contributing to a rise in gold prices to new heights. The interplay between the ongoing trade war and domestic economic policies continues to create a complex landscape for investors and policymakers alike.
