Uncertainty contributed to a significant sell-off in US stocks last week, especially in technology stocks.<\/p>\n\n\n\n
While we\u2019re seeing headwinds in the US, we\u2019re getting some good news in other parts of the world.<\/p>\n\n\n\n
There have been dramatic sell-offs throughout history, but stocks have had a way of moving higher over the longer term.<\/p>\n\n\n\n
Last week brought investors another bout of policy uncertainty and market jitters. Not surprisingly, the US stock market had a significant sell-off last week, with Friday\u2019s action violently dragging down US stocks \u2014 especially tech stocks.1<\/a> <\/sup>However, while we\u2019re seeing headwinds in the US, we\u2019re getting some good news in other parts of the world. In times like these, it\u2019s critical for investors to focus on their time horizon before reacting to short-term market reactions. Here\u2019s what we know and what I\u2019m watching.<\/p>\n\n\n\n Last week saw some bad news for US stocks:<\/p>\n\n\n\n In the last 8-10 weeks, I\u2019ve been getting the same question from investors, \u201cShould I change my allocation?\u201d And my answer is always the same: For those who have a long time horizon and are well diversified across and within the three major asset classes (stocks, fixed income, and alternatives), I would typically favor staying the course.<\/p>\n\n\n\n I know that can be easier said than done. The headlines and the market movements can be very unsettling for investors. So let me provide some perspective. This week we\u2019re celebrating my mother\u2019s 90th<\/sup> birthday, and I think it\u2019s fitting that it\u2019s happening in the midst of uncertainty and market volatility. She was born in 1935, in the midst of the Great Depression, when Franklin Delano Roosevelt was president of the United States. In the month she was born, the unemployment rate in the US was 17.54%.5<\/a><\/sup> She lived through World War II, 1940s-level tariffs, the Cuban Missile Crisis, the assassination of President John F. Kennedy, the Vietnam War, Watergate, stagflation, the 1970s stock market stagnation, the end of the Cold War, 9\/11, the Global Financial Crisis, and so much more. Uncertainty has been one of the certainties of her lifetime \u2014 along with the decades-long advance of the stock market,6<\/a><\/sup> despite all this tumult and change. There have been sell-offs \u2014 some very dramatic \u2014 along the way, but stocks have had a way of moving higher over the longer term.<\/p>\n\n\n\n Even now, while we\u2019re seeing headwinds in the US, we\u2019re getting some good news in other parts of the world. For example, eurozone manufacturing activity appears poised to improve, as indicated in the most recent Purchasing Managers\u2019 Index<\/a> (PMI) survey, which showed manufacturing PMI rose to 48.7 \u2014 the eurozone\u2019s highest level in 26 months.7<\/a><\/sup><\/p>\n\n\n\n As I\u2019ve said before, there is a seismic change occurring in Europe, with a very significant increase in fiscal spending, particularly around defense spending. It\u2019s not just Germany \u2014 France recently announced a material increase in defense spending as well \u2014 and I\u2019m sure there will be more to come. This should bode well for the European economy in general and its manufacturing sector in particular. I expect to see \u201cgreen shoots,\u201d signs that the economy is improving, in coming months thanks to the ramp up in fiscal spending.<\/p>\n\n\n\n This will be a very important week given the potential for a significant increase in tariffs on April 2. This is already causing a lot of market trepidation. In addition, we will get monthly jobs reports for both the US and Canada on Friday as well as some Consumer Price Index and PMI readings. We\u2019ll also hear from the Reserve Bank of Australia, which is making its monetary policy decision early this week.<\/p>\n\n\n\n And so, getting back to the question I\u2019ve gotten so often in recent weeks \u2014 \u201cShould I change my allocation?\u201d \u2014 I usually follow up with questions of my own: Is your time horizon longer than a presidential term? Is it longer than a recession? Is it longer than a decade? That\u2019s because if one has a long enough time horizon (and it doesn\u2019t need to be nearly as long as my mom\u2019s), one can maintain allocations to equities and other more volatile asset classes, especially if a portfolio is well diversified and has exposure to lower-correlating asset classes that can help smooth volatility. This is important to keep in mind given the potential for more tariffs this week \u2014 and more market jitters and understandable urges to abandon stocks. Buckle your seat belts, stay calm and carry on. And happy birthday, Mom!<\/p>\n\n\n\n —<\/p>\n\n\n\n Originally Posted on April 1, 2025 <\/p>\n\n\n\nWhat drove markets last week? <\/strong><\/h2>\n\n\n\n
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Focusing on the long term<\/strong><\/h2>\n\n\n\n
Global good news<\/strong><\/h2>\n\n\n\n
Looking ahead and staying focused<\/strong><\/h2>\n\n\n\n
Dates to watch<\/h4>\n\n\n\n
Date<\/strong><\/th> Report<\/strong> <\/th> What it tells us<\/strong><\/th><\/tr> March 31<\/td> Germany Consumer Price Index (CPI) <\/td> Tracks the path of inflation. <\/td><\/tr> <\/td> Chicago Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the manufacturing and services sectors. <\/td><\/tr> <\/td> Japan Tankan Survey <\/td> Tracks Japanese companies\u2019 views of economic and business conditions. <\/td><\/tr> <\/td> Japan unemployment rate<\/td> Indicates the health of the job market. <\/td><\/tr> <\/td> Reserve Bank of Australia Monetary Policy Decision <\/td> Reveals the latest decision on the path of interest rates. <\/td><\/tr> April 1<\/td> Eurozone Consumer Price Index (CPI) <\/td> Tracks the path of inflation. <\/td><\/tr> <\/td> Eurozone unemployment rate<\/td> Indicates the health of the job market. <\/td><\/tr> <\/td> US JOLTS Report <\/td> Gathers data related to job openings, hires, and separations. <\/td><\/tr> <\/td> US Manufacturing Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the manufacturing sector. <\/td><\/tr> <\/td> US ISM Manufacturing Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the manufacturing sector. <\/td><\/tr> <\/td> India Manufacturing Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the manufacturing sector. <\/td><\/tr> April 2<\/td> US ADP Report <\/td> Indicates the health of the US labor market. <\/td><\/tr> <\/td> US factory orders <\/td> Indicates the health of the manufacturing sector. <\/td><\/tr> <\/td> Japan Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> <\/td> China Caixin Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> April 3<\/td> Eurozone Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> <\/td> UK Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> <\/td> US Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> <\/td> US ISM Services Purchasing Managers\u2019 Index (PMI) <\/td> Indicates the economic health of the services sector. <\/td><\/tr> <\/td> Japan household spending <\/td> Tracks the health of the consumer. <\/td><\/tr> April 4<\/td> US Employment Situation Report <\/td> Estimates the number of people on payrolls in the US economy, their average weekly working hours and hourly earnings, and several versions of the unemployment rate. <\/td><\/tr> <\/td> Canada Jobs Report <\/td> Collects data on employment, unemployment, and labor force participation. <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n