"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."- Benjamin Graham
This insightful quote by Benjamin Graham highlights the contrast between short-term market sentiment and long-term intrinsic value. In the short term, stock prices are influenced by investor emotions and popularity, akin to a voting process. However, over time, the true fundamental value of a company is realized, much like a weighing machine assessing its actual worth.
Graham, known as the father of value investing, emphasized the importance of focusing on a company's fundamentals rather than being swayed by market fluctuations. This perspective encourages investors to adopt a long-term view, recognizing that while markets may be volatile in the short term, they tend to reflect true value over time.
Market Wrap
U.S. stock markets experienced one of their most dramatic single-day declines in years on Friday, April 4, 2025, as fears of a full-scale trade war and broader economic fallout triggered a widespread flight from risk assets.
China’s Retaliatory Tariffs Deepen Trade War:
China announced a 34% tariff on U.S. imports in response to the latest U.S. tariff hikes, sparking fears of a prolonged trade war and triggering a global market sell-off.
Fed Stays Cautious Amid Uncertainty:
Federal Reserve Chair Jerome Powell acknowledged the risks posed by trade tensions but maintained a wait-and-see approach, stating the economy remains strong yet vulnerable to prolonged disruptions.
Investor Anxiety Spikes:
The CBOE Volatility Index surged to a closing value of 45, its highest level since April 2020, reflecting mounting investor fears over the impact of protectionist policies and a possible global slowdown.
Tech on the Edge – Valuations Face the Test:
Technology stocks led the sell-off, with the Nasdaq Composite dropping 5.8%. While the index officially entered bear market territory, investors are particularly wary of tech firms' lofty valuations, which could be vulnerable if earnings disappoint or macro conditions worsen.
IMF Flags Global Risk:
The International Monetary Fund warned that the tit-for-tat tariff battle poses a “significant risk” to the global economy, urging policymakers to seek resolution to avoid further damage.
Flight to Safety Pressures Oil and Yields:
Crude oil prices slumped to a four-year low on fears of weakening demand, while U.S. Treasury yields fell as investors moved capital into safer assets, reinforcing recessionary concerns.
Apple Inc. shares fell 7.3% as China imposed a 34% tariff on U.S. goods, heightening concerns over increased production costs and reduced competitiveness in key markets.
Exxon Mobil Corp. shares slumped as China's tariffs, a major oil consumer, heightened concerns about weakening fuel demand, impacting the energy sector.
General Electric Co. shares plunged 11.1% to close at $166.81, underperforming competitors, amid a broadly negative trading session influenced by escalating trade tensions.
Boeing Co. shares declined significantly due to its heavy exposure to Chinese exports, following China's retaliatory tariffs in response to U.S. tariff hikes.
Ford Motor Co. shares held steady despite broader market declines, supported by a newly announced employee pricing promotion for all U.S. customers and strong recent sales in F-Series trucks and electric vehicles, which helped offset trade war concerns impacting the automotive sector.
GE Healthcare shares dropped after China restricted exports of a rare-earth metal used in MRI technology, impacting the company's production capabilities.
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