Decoding the Downturn: Guide to Current Market Moves

Markets are selling off with the news on PCE, which came in a bit stronger than anticipated. The market looks like it is retesting the lows, which is common before finding a base of support, bottoming, and moving higher. 

April 2^nd will be a very interesting day. That is the day Trump will announce his plan for tariffs. It’s anybody’s guess what will happen on April 2^nd, but no matter the short-term effects this market selloff will pass, and the market will move back up. 

U.S. corporate profits jump in Q4 

Corporate profits from current production rebounded 5.4% in Q4, the most in two and a half years, as businesses benefited from strong demand at the end of the year. Profits from foreign sources soared 18.8%, the most in nearly two decades. Domestic industry profits rose a smaller 3.6%, led by financials.  

Compared to a year ago, corporate profits were up 6.9%, about in line with average growth several years into an economic expansion. 

As a share of GDP, profits climbed to 13.5%, a new record high, and a sign that profit margins continued to expand at yearend. The trends for profit and margin growth, however, are facing a downside risk in 2025 from tariffs which are both raising production costs and slowing demand.