Stock Market Stages Relief Rally Despite a Worsening Outlook

Published: April 22, 2025 by Omor IE

Key Points

The stock market is staging a recovery rally after a Monday selloff.
Some major investment assets have been stabilizing, but there’s still weakness in the economy.
Major institutions are warning of higher inflation and increased risks of a recession.
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The stock market has recovered slightly this morning, even though the underlying problems that have caused stocks to crater in the past few weeks have only gotten worse. As such, the gains so far this morning could prove to be temporary. There have been no major policy change announcements on tariffs yet, and this is something major institutions see most of the pain coming from.

The stock market fell yesterday due to President Donald Trump warning of a “slowing” if Federal Reserve Chair Jerome Powell did not cut interest rates soon. Powell does not seem to have any plans to cut interest rates soon, as tariffs are expected to cause a bump in inflation. The stock market likely didn’t extend losses today due to some companies reporting fatter profits than expected and some assets stabilizing.

Here’s a market update as of 10:00 A.M (ET) today.

The S&P 500 is up 78.82 points, or 1.53%.
The Nasdaq Composite is up 291.8 points, or 1.83%.
The Dow Jones Industrial Average is up 505.84 points, or 1.32%.

Major Institutional Chiefs See More Volatility

The IMF Chief Economist Gourinchas warned of higher inflation and a “traditional recession” in the U.S. Here are some notable comments:

“Long term impact of tariffs, if maintained, will be negative for all regions.”
“…traditional recession in the US without inflation is more likely than stagflation.”
“The IMF doesn’t see signs on stress in FX markets.”
“The probability of us recession in 2025 is 40% vs 27% in October.”
“IMF doesn’t expect a recession in the US this year.”

The IMF cut its global trade growth forecast by 1.5 percentage points to 1.7% in 2025, and it sees 2.5% growth in 2026. Even the 2026 forecast is 0.8% lower than it was in its January outlook.

Here are some comments from Goldman Sachs’ CEO:

“Trade policy has changed the uncertainty in markets.”
“Level of uncertainty of is high, it’s good that there is delay in implementing reciprocal tariffs.”
“There will be volatility until the trade policy is understood.”
“Growth has slowed with Trump’s trade policy.”

Here’s what Citi’s Chief Economist had to say:

“If current disputes create permanent damage and show US policies will change drastically with each administration, US potential gdp growth can drop.”
“I don’t believe Trump will fire Fed’s Chief Powell. This rubicon will not be crossed.”

Other Assets

U.S. 10-Year Treasury Yields are still significantly higher than in the first week of this month. It is at 4.377% as of 10 AM, a slight 0.028% decline.
Gold is up 0.37% to $3,438/oz.
Crude Oil Futures are up 1.22%.
Natural Gas Futures are basically unchanged so far today, but they are on a downward trend.
Bitcoin is up 2.9% to $90.231.