How Tariffs Affect Your Investments

April 2, 2025

Throughout the first quarter we have been selling mostly technology-related positions and building up cash in our client accounts, averaging 25% - 30%. As noted in our previous  Affinity Capital Market Flash  of March 10 th    Market Flash | Affinity Capital , our view on the major market indices was as follows:

 

  • The tech-heavy Nasdaq will likely see another 5% to 9% downside.
  • The Dow Jones Industrial Average has reached a support level. While we would like to see it hold here, the next drop could be another 4.5% to 5 %. For perspective that would be in the area of another 2000 points to the downside – which sounds a bit scarier than 5%
  • The S&P 500 may see another 5% to the downside.

 

The futures markets for tomorrow's opening are significantly down as we write this, although we expect major volatility in the overnight markets. With futures this volatile, they can swing from negative to positive throughout the night. We will be rebalancing portfolios in the next few days and have been preparing for months to reshape our asset allocations to be ready for another leg down in the markets. Many positions will be rebalanced and new positions added, some of which may be partial purchases that we may add to, with further market deterioration .

 

Our long-term outlook for the markets remains positive and this correction provides long-term opportunity.

 

Factors Driving the Markets

This week, the stock market has experienced significant volatility, primarily driven by the President's announcement of new tariffs today. These tariffs include up to 20% levies on all imports to the U.S., with targeted increases on goods from China, Canada, and Mexico, as well as additional duties on cars, steel, and aluminum. The administration asserts that these measures aim to bolster domestic manufacturing and address perceived unfair trade practices. However, economists and business leaders have expressed concerns about potential economic fallout, including trade wars, inflation, and a possible recession.

 

In response to these developments, major stock indices have exhibited sharp movements. On Monday, March 31, the S&P 500 rose 30.91 points (0.6%) to 5,611.85, and the Dow Jones Industrial Average increased by 417.86 points (1%) to 42,001.76. Conversely, the Nasdaq Composite declined by 23.70 points (0.1%) to 17,299.29. These fluctuations reflect investor uncertainty regarding the potential impact of the tariffs on various sectors. ​

 

Certain sectors and companies have been notably affected. The technology sector, initially showing resilience, faced reversals as trade tensions escalated. For instance, Apple Inc. (AAPL) saw its stock price reach an intraday high of $225.175 before closing at $224.01, reflecting a modest increase of 0.37%. Similarly, Amazon.com Inc. (AMZN) experienced a 2.42% rise, closing at $196.82, after fluctuating between $187.48 and $198.28 during the day. Tesla Inc. (TSLA) demonstrated significant volatility, with its stock surging by 5.52% to close at $283.27, following an intraday low of $251.56. These movements underscore the market's sensitivity to policy announcements and the broader economic implications.​

 

The energy sector also felt the impact, with Exxon Mobil Corp. (XOM) experiencing a slight decline of 0.4%, closing at $118.56. This dip reflects broader concerns about how tariffs might affect global supply chains and energy markets.​

Beyond equities, other financial markets responded to the tariff news. Gold prices surged to record highs as investors sought safe-haven assets amid the uncertainty. Conversely, cryptocurrency markets weakened, and Treasury yields plunged due to increased demand for safer investments. ​

 

Looking ahead, the market is likely to remain volatile as investors digest the implications of the new tariffs and anticipate potential retaliatory measures from affected countries. Upcoming economic data releases, including the Consumer Price Index (CPI) and initial jobless claims, will be closely monitored for signs of inflationary pressures and labor market health. Additionally, corporate earnings reports in the coming weeks will provide further insights into how companies are navigating the current economic landscape.​

 

As always, we welcome your questions and are here to support you. At the heart of everything we do is our commitment to "Wealth Management for Life"—providing enduring guidance for you and your family’s financial success.

Markets, Geopolitics, and Recent Volatility

January 21, 2026
Recent market headlines have been driven less by economic data and more by geopolitics. In particular, renewed discussion around Greenland and its strategic importance has introduced a new layer of uncertainty into global markets. Greenland matters not because of its size or population, but because of its location and resources. It sits at a critical crossroads between North America and Europe, plays an increasingly important role in Arctic shipping routes, and holds significant reserves of rare earth minerals that are essential for technology, defense systems, and energy infrastructure. As global competition for these resources intensifies, Greenland has become a focal point in broader strategic and trade discussions. Markets reacted quickly to this uncertainty. U.S. stock indexes moved lower in a broad selloff, with technology shares leading the decline. At the same time, investors shifted toward more defensive assets, pushing volatility higher, lifting gold prices, and pressuring risk-oriented assets such as cryptocurrencies. Similar caution was reflected in overseas markets as well. When geopolitical issues intersect with trade policy, markets tend to respond swiftly. Even the possibility of changes in tariffs, trade relationships, or diplomatic alignment can influence assumptions about global supply chains, corporate earnings, and economic growth. That is what markets have been digesting. These developments are now a regular part of the global environment. Markets today must absorb not only interest rates and earnings reports, but also geopolitical strategy, resource security, and shifting alliances. This can create short-term market adjustments as investors reassess expectations. Geopolitical uncertainty does not automatically translate into lasting economic damage. Markets have navigated trade disputes, diplomatic standoffs, and strategic realignments many times before. Over time, clarity emerges, negotiations evolve, and economic activity adapts. We continue to watch these developments closely and view them as part of the broader global backdrop in which markets operate. While the headlines may feel new, the underlying dynamic of markets responding to geopolitical uncertainty is familiar and expected. If you have questions about how global events fit into the bigger picture, we are always available to talk them through. Understanding the context behind the headlines is often the most effective way to stay grounded when markets react to evolving global issues.

The Policy Pivot: Key Takeaways for Investors

December 11, 2025
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Finishing 2025 Strong: Key Trends to Watch

December 1, 2025
As we move into the final month of 2025, markets are adjusting to a new mix of encouraging economic trends and lingering uncertainty. November ended on a softer note, but December has opened with improved sentiment, clearer expectations around Federal Reserve policy, and a more confident tone in both equity and fixed income markets. Investors are watching these shifts closely, and the weeks ahead will help determine how the year ultimately finishes. At Affinity Capital, we continue to see an environment supported by quality leadership, steady earnings, and more attractive income opportunities. At the same time, late-cycle pressures and uneven economic data remind us that thoughtful risk management remains essential. A More Constructive Tone to Start December December began on firmer footing after several weeks of mixed performance. The most significant driver has been the market’s growing conviction that the Federal Reserve is getting closer to the start of a rate-cutting cycle. Current pricing suggests a meaningful chance of a cut in the near term, which has helped lift sentiment across equities and high-quality bonds. This optimism has also supported areas that tend to benefit from lower yield expectations, such as precious metals and rate-sensitive parts of the market. While not a guarantee of what comes next, the shift toward more accommodative policy expectations has created a more balanced backdrop than we saw earlier in the fall. Economic Data Remains Mixed Despite the improved tone, the incoming data continues to show pockets of weakness. Manufacturing activity has contracted for another month, hiring momentum has slowed, and consumer spending has moderated from its pace earlier in the year. The recent government shutdown delayed several economic releases, and the catch-up process has added some short-term noise to the data stream. What stands out is the contrast between a resilient corporate earnings picture and a softer macro environment. Many large companies continue to report healthy margins and steady demand, yet the broader economic indicators suggest that growth is losing some steam. This type of divergence is typical in late-cycle phases and often results in more frequent market swings. Volatility Has Picked Up After months of historically low volatility, markets have begun to experience more frequent fluctuations. Concerns around artificial intelligence valuations, regional banking stress, and geopolitical developments have all played a role. Volatility is not necessarily a sign of structural weakness, but it is a reminder that investors should expect a less predictable finish to the year. For diversified portfolios, these swings can create opportunities to rebalance, harvest gains, or add exposure to areas that have repriced more attractively. They also highlight the importance of high-quality holdings that can withstand periods of uncertainty. Opportunities Across Equities and Fixed Income Even with the mixed data backdrop, the overall investment environment remains constructive for long-term investors. High-quality U.S. companies with strong balance sheets and consistent earnings continue to provide stability at the core of portfolios. Select small-cap and mid-cap companies have also begun to show signs of improvement as rate expectations shift. In fixed income, today’s yields offer significantly more value than they did for much of the past decade. Bonds once again contribute meaningful income, and the possibility of lower rates in 2026 creates potential for price appreciation in high-grade credit. This combination strengthens the case for balanced portfolios that include both equities and fixed income. Positioning Into Year-End Given the current landscape, we believe the market is moving toward a finish that is neither overly exuberant nor overly cautious. Several key themes are likely to guide performance over the coming weeks. Quality leadership continues to play an important role, especially in sectors tied to innovation, cloud infrastructure, and digital transformation Broad market exposure remains valuable in capturing the benefits of seasonal strength and earnings resilience Dividend-oriented and defensive holdings support stability in late-cycle environments High-quality bonds offer attractive income and diversification benefits Small-cap and mid-cap allocations may provide long-term upside as rate expectations shift Looking Ahead As the year comes to a close, investors are balancing two realities. On one side, there is growing optimism around potential rate cuts, resilient corporate earnings, and improving seasonal patterns. On the other side, there are signs of slowing economic momentum, higher volatility, and continued geopolitical uncertainty. The result is a market that rewards discipline, diversification, and a focus on long-term goals. At Affinity Capital, our approach remains steady. We continue to emphasize high-quality holdings, balanced allocations, and thoughtful adjustments based on data rather than emotion. The coming months will bring new information, but the principles that guide long-term success remain unchanged. We are here to help clients stay aligned with their plans and positioned with confidence as we move into a new year.