The financial market made a quick recovery this week with some of the more volatile names in the industry leading the way. Wenesday's news that tariffs (outside of China) would be delayed by 90 days led to some optimism and even weak economic data late in the week didn't put a damper on the market.
According to data provided by S&P Global Market Intelligence, shares of SoFi Technologies (SOFI +2.05%) jumped as much as 11.3% this week, KKR (KKR +1.46%) was up 9.2% at its peak, and Capital One Financial (COF +2.87%) rose 7.4%. The stocks are up 10.6%, 7.5%, and 6%, respectively, as of 2:30 p.m. ET.
Bouncing off a low
To be fair, the moves this week are compared to last week's market collapse. Shares are still down from the beginning of April, only 11 days ago, and have all fallen so far in 2025.
With that perspective, it's hard to call this a durable rally. But investors were betting this week that a delay in some tariffs and potential deals on others would reduce the risk of a recession and therefore defaults on the debt companies like SoFi and Capital One have on their balance sheets. KKR's rise was clearly because asset values are up, and that's a big part of their fee structure.
While the short-term risk may be seen as lower than a few days ago, there are still more risks today than early this year as economists ramp up their expectations for a recession. And making matters worse is the rise in interest rates this week that could make it more costly for companies, consumers, and even the government to refinance debt. Oh, and the dollar is dropping, too.
NASDAQ: SOFI
Key Data Points
Taking a step back
Long-term investors will want to take this opportunity to look at the long-term trends in the market and economy. So far in 2025 consumer confidence is down, tariffs and expectations for inflation are up, and interest rates are rising.
Those factors don't bode well for the economy or financial firms, so it'll be a matter of who will survive and thrive through upcoming market turbulence. I don't think we're in for major losses on loans at this point, but the risks for financial companies are leveraged compared to most stocks based on their business models, so earnings and guidance will be worth watching closely.
Ignore the volatility
As these stocks rise and fall rapidly, it's important for investors to keep in mind the long-term goal, which is to buy opportunistically when the market is thinking short-term. I think these companies will be able to manage risks better than what the market saw during the financial crisis and while the recovery may not be smooth I'm starting to dollar-cost average at lower prices. Long-term, any big dips are opportunities for investors.
