Weekly Market Recap: April 21, 2025

Theweekin review

• Retail sales rose 1.4% m/m
• Housing starts came in at 1.32mm
• Industrial production fell 0.3% m/m

Theweekahead

• PMIs
• New/existing home sales
• Durable goods

Thought of the Week

Markets are forward looking, but earnings estimates don’t have to be. Currently, consensus is projecting 1Q25 and FY25 year-over-year EPS growth of 7.1% and 10.0%, respectively. Relative to 10-year medians of 4.4% and 3.1%, both estimates are strong. Unfortunately, they’re based on economic assumptions that no longer hold. Tariffs will slow growth, increase inflation and undermine confidence. Weaker demand will hurt revenues, higher costs will hurt margins and reduced profitability will hurt buybacks. Even if the administration changes its mind, the longer uncertainty remains, the longer spending slumps, and the greater the hit to growth. Equity analysts aren’t immune to this uncertainty. Rather than bouncing estimates around with tariffs, current numbers are effectively pre-policy. As this week’s chart shows, downward revisions to 2025 EPS estimates aren’t any larger than normal. Since January, consensus has dropped 2.5% compared to the 10-year average of 2.6%. As policy clarifies, there’s a risk EPS estimates could hit the ground hard, catapulting valuations. Early impacts of tariffs are showing up in other ways. Retail sales spiked 1.4% in March, the largest m/m increase in over two years, driven by 5.3% growth in auto sales as consumers front-run tariffs. Moreover, 44 companies have reported earnings so far, and tariffs have been mentioned 239 times. Many management teams, however, are pausing guidance until policy clarifies. For now, the range of outcomes is wide, and the impacts are difficult to predict. Companies’ ability to hold the line will depend on their individual supply chains, pricing power and balance sheets, to name a few. In times like these, first principles are paramount: quality, diversification and a long-term perspective.

Chart of the Week: Source: FactSet, Standard & Poor’s, J.P. Morgan
Asset Management. Data are as of April 17, 2025.
Thought of the week: Source: FactSet, Standard & Poor’s, J.P. Morgan
Asset Management. Data are as of April 17, 2025.

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Originally Posted April 21, 2025 – Weekly Market Recap

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