Local stocks caught in market upheaval

The financial market turmoil triggered by Trump administration policies has not left Rochester unscathed. In fact, many local stocks have fared worse than the major U.S. indexes.

Among two dozen stocks of local interest tracked by the Rochester Beacon—publicly held companies based in the Rochester area or with sizable operations here—17 have suffered steeper declines than the S&P 500 index since Donald Trump returned to the White House on Jan. 20.

As of Tuesday’s close of trading, the S&P 500 was down 18 percent; by comparison, the local stocks as a group had fallen 21 percent. In 2024, the local composite rose 6 percent, with nine local stocks outpacing the S&P 500’s gain of more than 23 percent. It was only the second time in a quarter-century that the benchmark index had posted back-to-back annual gains of more than 20 percent.

Some of the local stocks with the biggest share-price increases in 2024 have seen dramatic declines this year. Batavia-based Graham Corp., whose price jumped 134 percent last year and led the group tracked by the Beacon, has experienced a 43 percent drop since Trump took office on Jan. 20. Gannett Co. Inc., owner of the Democrat and Chronicle, ranked second in 2024, up 120 percent; its share value has plunged 45 percent since Jan. 21. Constellation Energy Corp., which ranked third last year with a 92 percent gain, is down 43 percent.

Investors initially welcomed Trump’s return to office. Through early January and continuing until mid-February, the market had upward momentum. However, in late February share values began to lose ground—a retreat that turned into a rout after the president announced his “Liberation Day” global tariffs on April 2. The tariff hikes were unlike anything seen since the 1930 Smoot-Hawley Tariff Act, which economic historians say sparked a global trade war and worsened the Great Depression.

As he made the late-afternoon announcement of his executive action, Trump said, “For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike. But now it’s our turn to prosper.”

The markets saw things differently. The next day, the S&P 500 fell almost 5 percent, its worst one-day drop since June 2020, amid the COVID-19 pandemic’s initial wave. At the end of trading that day, the S&P was down 10.8 percent since Inauguration Day.

The losses have continued to mount. The S&P now has fallen 18 percent from its record high set in February—and is close to bear market territory, or a loss of 20 percent from its peak.

On Tuesday, the market rebounded strongly in the morning, but the gains evaporated after the White House said the announced U.S. tariff rate on Chinese imports would jump to 104 percent—a 50 percent increase from the existing rate—after midnight. (In response to Trump’s initial tariff announcement, China had declared a 34 percent retaliatory tariff on all U.S. goods—which it increased to 84 percent Wednesday morning after the U.S. tariff took effect.) Uncertainty about what comes next has pushed the CBOE Volatility Index to its highest level since the pandemic hit in early 2020. The last time the S&P 500 hit an intraday high up more than 4 percent but closed down more than 1 percent was 1978—nearly a half-century ago.

Not all local stocks have been caught in the market’s strong downdraft. Seneca Foods Corp. shares are up 5 percent since Dec. 31 and 14 percent since Inauguration Day. Pactiv Evergreen Inc. also has remained in positive territory, up 1 percent.

Investors in Paychex Inc., Charter Communications Inc., and Constellation Brands Inc. have seen only single-digit drops since Jan. 21. For all other stocks among the two-dozen tracked by the Beacon, the share price decline has been in the double-digits.

At the end of last year, the consensus among analysts held that the stock market would continue to rise this year, though not as sharply as the last two years. The tech sector was expected to continue to drive growth in share values. Instead, the tech-heavy Nasdaq Composite, which surged nearly 29 percent in 2024, has plunged 21 percent since Dec. 31. (The Dow Jones Industrial Average is off 11 percent year to date.)

Many economists now think the odds of a recession have risen to 50 percent or higher. Bruce Kasman, the head of economic research at JPMorgan, wrote in a note titled “There Will Be Blood” that the probability of a recession now is 60 percent, up from 40 percent. JPMorgan expects unemployment to reach 5.3 percent next year, up from 4.2 percent nationwide in March. The Rochester-area jobless rate in February was 4.4 percent, unchanged from a year earlier.

Wrote Kasman: “The size and disruptive impact of U.S. trade policies, if sustained, would be sufficient to tip a still healthy U.S. and global expansion into recession.”

The Budget Lab at Yale University says an increase in the average effective tariff rate of 20 percentage points will raise U.S. consumer prices by 2.3 percent in the short run and cause an average loss of purchasing power of $3,800 per household in 2024 dollars. (These projections assume no policy reaction from the Federal Reserve.) The Budget Lab also expects U.S. tariffs, and foreign retaliation, to reduce real GDP growth by 0.9 percentage point this year.

The mood among smaller businesses appears to be more positive, at least for now. The Paychex Small Business Employment Watch index of hiring among smaller companies, which account for nearly half of total U.S. employment, showed little change last month.

“According to our most recent data, the small business labor market is fundamentally healthy and showing no current signs of a recession,” said John Gibson, Paychex president and CEO, in an April 1 statement. “Job growth within U.S. small businesses continues at levels we have seen over the last several quarters, while wage growth has remained below three percent for the fifth-straight month.”

The index data was collected before Trump’s tariff announcement, however. Now, even some of the president’s strongest supporters in the business sector have questioned the move.

The Washington Post reported that Elon Musk personally appealed to the president to take a step back on tariffs. Online, he has heaped scorn on White House trade adviser Peter Navarro, writing in one post that “Navarro is truly a moron,” and in another describing him as “dumber than a sack of bricks.”

Billionaire hedge fund manager Bill Ackman, who on Monday wrote he is “totally supportive” of using tariffs to “eliminate tariffs and unfair trading practices of our trading partners, and to induce more investment and manufacturing in our country,” nonetheless says he believes “the formula used by the administration to calculate tariffs made other nations’ tariffs appear four times larger than they actually are. … The global economy is being taken down because of bad math.”

Nevertheless, Trump has vowed that the tariffs will remain until the U.S. trade deficit is reduced to zero. Over the weekend on his social media channel, he wrote: “Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!”

Paul Ericson is Rochester Beacon executive editor.

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