The S&P 500 Index ($SPX) (SPY) fell by 5.49% today, while the Dow Jones Industrials Index ($DOWI) (DIA) dropped 4.68%. The Nasdaq 100 Index ($IUXX) (QQQ) recorded a decline of 6.25%. Furthermore, June E-mini S&P futures (ESM25) are down 5.82% and June E-mini Nasdaq futures (NQM25) decreased by 6.65%.

Today, stock indexes are experiencing significant declines, erasing gains from Wednesday’s rally. Despite President Trump’s announcement on Wednesday of a 90-day pause on reciprocal tariffs for 56 countries, concerns are mounting about the implications of U.S. trade policies on the global economy. Many tariffs remain in effect. These tariffs have negatively impacted consumer confidence and prompted numerous companies to halt their capital spending plans, posing risks to GDP growth. Additionally, the U.S.-China trade conflict intensified after China retaliated Wednesday, imposing 84% tariffs on U.S. goods. Meanwhile, the White House clarified that tariffs on Chinese products now total 145%, up from 104%. On a positive note, the EU has declared a 90-day pause on its previously announced retaliatory tariffs on U.S. goods.

Today’s economic data in the U.S. provided some support for stocks, revealing decelerating inflation and a stable labor market. The March CPI excluding food and energy rose less than expected, marking the slowest increase in four years. Furthermore, the job market remains strong, as indicated by weekly jobless claims aligning with predictions.

U.S. weekly initial unemployment claims increased by 4,000 to 223,000, matching expectations. On the other hand, weekly continuing claims fell by 43,000 to 1.850 million, indicating a more robust labor market than the anticipated figure of 1.886 million.

The March CPI report showed a year-over-year increase of 2.4%, slightly below the 2.5% forecast and the smallest rise in six months. Moreover, the March CPI excluding food and energy rose 2.8% year-over-year, weaker than the expected 3.0% and the smallest annual increase in four years.

Comments from Fed officials today expressed concerns for the stock market. Kansas City Fed President Schmid stated that he would “prioritize reining in inflation” should the Fed need to balance its inflation target against employment goals. Additionally, Dallas Fed President Logan noted the importance of preventing tariff-related price hikes from causing prolonged inflation.

Weak demand in China, the world’s second-largest economy, has appeared to negatively affect global growth expectations. China’s March CPI decreased by 0.1% year-over-year, falling short of expectations for no change. The March PPI also dropped by 2.5%, worse than the predicted decrease of 2.3%.

On Wednesday, President Trump announced a 90-day pause on new reciprocal tariffs impacting 56 nations while maintaining the new 10% baseline tariff on nearly all countries. In response, the EU declared it would hold off for 90 days on implementing 25% tariffs on €21 billion worth of U.S. goods bound for Europe.

Markets have experienced downward pressure recently due to concerns that U.S. tariffs may reduce economic growth and corporate earnings. Notably, on March 4, President Trump imposed 25% tariffs on goods from Canada and Mexico and raised the tariff on Chinese goods from 10% to 20%. Last Wednesday, he signed a proclamation to enforce a 25% tariff on U.S. auto imports, which will initially focus on fully assembled vehicles from outside the U.S. and eventually expand to include foreign-made automobile parts. Mr. Trump indicated these tariffs would be “permanent” without negotiations for exceptions. A 10% baseline tariff for almost all countries also went into effect last Saturday.

The markets are currently indicating a 25% chance of a 25 basis point rate cut following the FOMC meeting on May 6-7, a slight decrease from 30% last week.

This week, the focus will shift to U.S. trade policies. For instance, the final-demand PPI for March is projected to rise to 3.3% year-over-year, up from 3.2% in February, while the PPI excluding food and energy is expected to increase from 3.4% in February to 3.6%. The University of Michigan’s April consumer sentiment index is anticipated to fall to 54.0 from 57.0 in March.

On Friday, the earnings reporting season for Q1 will kick off with major U.S. banks delivering their results. According to Bloomberg Intelligence data, the market consensus anticipates a year-over-year earnings growth of 6.7% for the S&P 500 in Q1, a reduction from earlier expectations of 11.1% in November. Additionally, corporate profits for the S&P 500 in 2025 are projected to grow by 9.4%, down from an earlier forecast of 12.5% in January.

Internationally, stock markets are trending higher. The Euro Stoxx 50 increased by 4.99%, China’s Shanghai Composite Index gained 1.16%, and Japan’s Nikkei Stock 225 surged by 9.13%.

Interest Rates

June 10-year T-notes (ZNM25) are up by 26 ticks, with the 10-year T-note yield declining by 2.1 basis points to 4.310%. Today’s gains in T-notes are fueled by speculation that President Trump’s recent tariff pause may restore confidence in the U.S. and deter foreign investors from offloading dollar assets, including stocks and Treasuries. Additionally, slower-than-expected growth in U.S. consumer prices in March has been favorable for T-notes, and today’s stock decline has increased safe-haven demand for them. However, supply pressures are evident as the Treasury plans to auction $22 billion in 30-year T-bonds today to cap this week’s $119 billion in T-note and T-bond auctions.

European bond yields are mixed today. The yield on 10-year German bunds has risen by 0.5 basis points to 2.596%, while the yield on 10-year UK gilts has dipped by 13.6 basis points to 4.644%.

Swaps currently suggest a 92% likelihood of a 25 basis point rate cut by the ECB in their April 17 policy meeting.

US Stock Movers

The Magnificent Seven stocks are facing pressure, influencing the broader market negatively. Tesla (TSLA) is down more than 6%, while Apple (AAPL), Nvidia (NVDA), and Meta Platforms (META) see reductions of over 4%. Additionally, Amazon (AMZN) has decreased by more than 3%, while Microsoft (MSFT) and Alphabet (GOOGL) have each fallen over 2%.

Chip makers are also experiencing a downturn today, contributing further downward momentum to the market. Microchip Technology is down more than 10%, and ON Semiconductor (ON) has suffered a decline of over 9%. Other notable declines include NXP Semiconductors NV (NXPI) falling over 8% and Micron Technology (MU), Advanced Micro Devices (AMD), Marvell Technology (MRVL), and Analog Devices (ADI) all seeing reductions exceeding 7%. Texas Instruments (TXN) and GlobalFoundries (GFS) are also down significantly.