Stock Markets Slide Amid Trade Tensions and Economic Data

The S&P 500 Index ($SPX) (SPY) has dipped by -2.89%, while the Dow Jones Industrial Index ($DOWI) (DIA) is down -2.57%. The Nasdaq 100 Index ($IUXX) (QQQ) has fallen by -2.83%. June E-mini S&P futures (ESM25) are down -2.62%, and June E-mini Nasdaq futures (NQM25) have decreased by -2.55%.

Today, stock markets are experiencing significant declines for the second consecutive session. The S&P 500, Nasdaq 100, and Dow Jones Industrial Average have all reached levels not seen in 7-3/4 months. The downturn intensified following China’s announcement of a 34% tariff on all U.S. imports set to take effect on April 10. Nonetheless, stock index futures did manage to recover from their lowest points after the U.S. labor market reported better-than-expected job growth for March.

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In March, U.S. nonfarm payrolls increased by +228,000, surpassing the forecast of +140,000. However, the unemployment rate unexpectedly rose by +0.1 to 4.2%, indicating a weaker labor market than anticipated, which had been expected to remain stable at 4.1%.

Average hourly earnings for March increased by +3.8% year-over-year, falling short of expectations of +4.0% year-over-year and marking the smallest uptick in eight months.

Market pressures had been building following President Trump’s announcement of reciprocal tariffs last Wednesday, which exceeded expectations and heightened fears that U.S. trade policies could potentially lead to a national and global economic downturn. This has sparked a risk-off sentiment across asset markets, prompting an influx into government bonding, which pushed European bond yields down to one-month lows and caused the 10-year T-note yield to hit a six-month low.

President Trump confirmed that the U.S. will impose a minimum 10% tariff on nearly all countries, with heightened rates for around 60 nations. These tariffs are set to begin on imports from almost all countries by April 5, with elevated rates to roll out on April 9. While specific sectors such as steel and automobiles have exemptions, Canada and Mexico will continue to face previously determined 25% tariffs. China will absorb a 34% reciprocal tariff rate, totaling 67%, whereas the EU will face a 20% reciprocal tariff, bringing its total to 39%. Japan will incur a 24% reciprocal tariff, totaling 46%.

Investor apprehension has been palpable for the past month as tariffs appear poised to hamper economic growth and corporate earnings. On March 4, President Trump enacted 25% tariffs on goods from Canada and Mexico, and raised the tariffs on Chinese imports from 10% to 20%. Furthermore, last Wednesday, he signed a proclamation to impose a 25% tariff on U.S. auto imports effective Thursday, which will eventually extend to automobile parts manufactured outside the U.S.

Attention now shifts to Fed Chair Powell, who is expected to address the Society for Advancing Business Editing and Writing Conference about the economic outlook later today.

The market is currently pricing in a 36% probability of a -25 basis point rate cut following the May 6-7 FOMC meeting.

International markets are similarly negative today. The Euro Stoxx 50 has fallen to a 3-1/2 month low, down -2.95%. The Shanghai Composite Index was closed for the Tomb Sweeping Day holiday, while Japan’s Nikkei 225 plummeted to a 7-3/4 month low, closing down by -2.75%.

Interest Rates

June 10-year T-notes (ZNM25) surged by +29 ticks today, with the 10-year T-note yield down -11.5 basis points to 3.914%. T-notes reached a six-month high, while the yield fell to a new six-month low of 3.856%. The surge in T-notes followed concerns that a global trade war could drive both the U.S. and global economies into recession after China’s announcement of 34% tariffs. Additionally, the flight to safety amidst the global equity market selloff has boosted demand for government debt. The downturn in crude oil prices to a four-year low has reduced inflation expectations, causing the 10-year breakeven inflation rate to fall to a six-month low of 2.165%. T-notes dropped back from their peak following the more favorable U.S. payrolls report, adding hawkish pressure on Fed policy.

In Europe, bond yields have also dropped sharply. The 10-year German bund yield fell to a one-month low of 2.479%, down -11.4 basis points to 2.537%. The 10-year UK gilt yield has similarly decreased to a 3-1/2 month low of 4.375%, down -8.2 basis points to 4.438%.

German factory orders for February remained unchanged month-over-month, missing expectations of a +3.4% month-over-month increase.

Swaps currently forecast an 84% chance of a -25 basis point rate cut from the ECB at the April 17 policy meeting.

US Stock Movers

The “Magnificent Seven” stocks are on a downward trend today, significantly impacting market performance. Tesla (TSLA) has declined by over -6%, while Nvidia (NVDA) is down more than -4%. Other tech giants, including Apple (AAPL), Amazon.com (AMZN), and Meta Platforms (META), have experienced declines of over -2%. Alphabet (GOOGL) has dropped by -0.39%.

Chipmakers are under notable pressure, with Marvell Technology (MRVL) down more than -7%. Other companies, such as Micron Technology (MU), KLA Corp (KLAC), Broadcom (AVGO), NXP Semiconductors NV (NXPI), and Lam Research (LRCX) have all fallen more than -5%. Additionally, Analog Devices (ADI), Applied Materials (AMAT), Intel (INTC), Advanced Micro Devices (AMD), and Texas Instruments (TXN) are all down by more than -4%.

Concerns about rising prices due to tariffs have negatively impacted travel and leisure stocks. United Airlines Holdings (UAL) has decreased by more than -8%, and Wynn Resorts Ltd (WYNN) has dropped by over -7%. Other stocks in this sector, including Host Hotels & Resorts (HST), Norwegian Cruise Line Holdings (NCLH), Royal Caribbean Cruises Ltd (RCL), Delta Air Lines (DAL), and Caesars Entertainment (CZR), have all decreased by more than -6%. Carnival (CCL) and Expedia Group (EXPE) are also down by over -5%.

Energy stocks and service providers are facing significant selloffs as WTI crude prices have fallen by more than -7% to a four-year low. As a result, APA Corp (APA) has fallen by over -9%, and Diamondback Energy (FANG) decreased by more than -8%. Halliburton (HAL) and Devon Energy (DVN) were also down more than -7%, while Schlumberger (SLB), Occidental Petroleum (OXY), and ConocoPhillips (COP) fell by over -6%.

U.S.-listed Chinese stocks are reeling after China imposed a 34% tariff on all U.S. imports. Companies such as Alibaba Group Holding Ltd (BABA), Baidu (BIDU), JD.com (JD), NetEase (NTES), and PDD Holdings (PDD) have all seen declines of more than -6%.

DuPont de Nemours (DD) plummeted by more than -11% following an investigation by China’s State Administration for Market Regulation regarding potential antitrust violations.

RxSight (RXST) is down over -3% after JPMorgan Chase downgraded the stock to underweight from overweight with a price target set at $17.

Nordstrom (JWN) has declined by more than -2% after Citigroup downgraded it to sell from neutral with a price target of $22.

Conversely, defensive stocks in the food and beverage sector are performing well amid broader market declines. Church & Dwight (CHD) has risen by over +2%, while Clorox (CLX), General Mills (GIS), PepsiCo (PEP), and Conagra Brands (CAG) have each risen by over +1%.

Leading the gainers in the S&P 500, MarketAxess Holdings (MKTX) has surged by more than +5% after announcing that its March total daily volume rose +46% year-over-year, reaching a record $46.5 billion.

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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