How Tariffs Affect Your Investments | Affinity Capital

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.

Signals from the Fed: Inflation, Growth, and What Comes Next

August 22, 2025
It was a Fed-heavy week, with three major developments that matter for markets and the economy. FOMC minutes (July 29–30) — released Wednesday (Aug. 20). The minutes reinforced a data-dependent stance : participants saw continued progress on inflation but noted that risks aren’t one-way, citing pockets of labor-market cooling and the growth impact of tighter financial conditions. Policymakers emphasized flexibility and the need to see inflation moving durably toward 2% before declaring victory. For investors, the takeaway is that the bar for rapid policy shifts remains high, but the Committee is clearly keeping both sides of the mandate in view. Weekly balance sheet (H.4.1) — released Thursday (Aug. 21). The Fed’s weekly statement showed the usual moving pieces: securities holdings, reserve balances, and program usage. While week-to-week changes can be noisy, the release remains a useful pulse on system liquidity and the runoff of the Fed’s portfolio under quantitative tightening . Markets watch aggregate reserves and Treasury General Account flows because they can nudge front-end rates and funding conditions at the margin. Jackson Hole — Chair Powell’s Friday address. At the Kansas City Fed’s annual symposium, Chair Powell underscored that policy decisions will continue to be guided by incoming data . He highlighted the balance between sustaining expansion and finishing the job on inflation , noting tariff-related price pressures and supply-chain considerations among factors being monitored. The message: no preset path, but openness to adjust as evidence accumulates. Historically, Jackson Hole is more about long-term framework and risk management than near-term moves, and that tone held this year. What it means for the days ahead Near-term market drivers will be how inflation and labor data align with the Fed’s “proceed carefully” posture. • If inflation continues to edge lower while growth holds steady, the door stays open to gradual policy easing later this year. • If price pressures re-accelerate—or if hiring slows more sharply than expected—the Fed may extend its wait-and-see approach. Liquidity dynamics from the Fed’s balance sheet runoff will remain a background factor , but the central story is still inflation’s glide path and the durability of demand . Investors should expect choppy trading around key data releases , with markets pricing probabilities rather than certainties. 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.

Fed Moves and Market Trends | Affinity Capital

August 6, 2025
Markets entered the week with a boost of optimism, fueled by softer labor data and growing chatter that the Federal Reserve might be leaning toward a rate cut this fall. But that optimism didn’t last long . As the week unfolded, economic uncertainty returned to center stage: fresh concerns about tariffs, underwhelming corporate earnings in some sectors, and signs of consumer fatigue in key parts of the economy tempered the early enthusiasm.

Weekly Market Update: Stability Amid Data and Tariff Jitters | Affinity Capital

July 17, 2025
This week’s stock markets were marked by tight trading ranges, record-setting highs in tech, and a backdrop of macro uncertainty. The S&P 500 (through SPY), Nasdaq (QQQ), and Dow (DIA) eked out modest gains, shrugging off headline volatility tied to Fed independence concerns and escalating tariff threats.