The S&P 500 Index ($SPX) (SPY) is down -1.05%, while the Dow Jones Industrials Index ($DOWI) (DIA) has decreased by -0.38%. The Nasdaq 100 Index ($IUXX) (QQQ) has experienced a drop of -1.76%. Concurrently, June E-mini S&P futures (ESM25) are down -1.03%, and June E-mini Nasdaq futures (NQM25) are off by -1.75%.

Today, stock indexes are trading lower, primarily influenced by declines in chip stocks. Notably, ASML Holding NV has dropped more than -5% following Q1 bookings that fell short of expectations. Similarly, Nvidia has seen a decline of over -6% after the US government restricted the sale of its H20 chips to China. Nvidia anticipates a loss of $5.5 billion in Q1 due to this ban, which affects inventory and commitments. The decline in stock prices intensified following the WTO’s reduction of its 2025 global trade forecasts.

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On the economic front, today’s US news was largely better than anticipated, providing some support for stocks. Additionally, a Bloomberg report indicated that China seeks specific actions from the Trump administration before engaging in trade discussions, emphasizing the need for a reduction in disparaging remarks from cabinet members.

For the week ending April 11, US MBA mortgage applications fell -8.5%. The purchase mortgage sub-index declined by -4.8%, and the refinancing mortgage sub-index decreased by -12.4%. The average 30-year fixed-rate mortgage increased by 20 basis points, rising to 6.81% from 6.61% the previous week.

In March, retail sales grew by +1.4% month-over-month, aligning with expectations, while retail sales excluding autos increased by +0.5%, surpassing the anticipated +0.4%. Manufacturing production for March rose by +0.3%, exceeding projections of +0.2%.

The NAHB housing market index for April unexpectedly rose by +1 to 40, which was stronger than the expected decline to 38. However, the World Trade Organization (WTO) lowered its global trade outlook for 2025 to a -0.2% decline, down from a previous estimate of +3.0%. The WTO warned that if the US pursues reciprocal tariffs, global trade could contract by -1.5% this year.

Last Friday, President Trump announced that consumer electronics would be temporarily exempt from reciprocal tariffs and the baseline 10% global tariffs. Nonetheless, a 20% tariff remains in effect for electronics imported from China. Earlier last week, he implemented a 90-day delay on raising reciprocal tariffs on 56 nations but maintained the new 10% baseline tariff affecting nearly all countries. In response, the EU announced a 90-day postponement on 25% tariffs targeting $21 billion worth of US goods.

Stocks have faced pressure for five consecutive weeks amid concerns that US tariffs could dampen economic growth and corporate earnings. On March 4, President Trump instituted a 25% tariff on goods from Canada and Mexico and raised the tariff on Chinese goods from 10% to 20%. On April 2, he signed a proclamation to apply a 25% tariff on US auto imports, initially affecting fully assembled vehicles, with plans for it to include auto parts by May 3. Additionally, a new 10% baseline tariff took effect on April 5, prompting China to respond by increasing tariffs on all US goods to 125% from 84%.

The ongoing tariff conflicts have weakened the dollar and propelled gold prices higher. The dollar index fell to a three-year low last Friday, while gold surged to an all-time high today. Investors are worried about the impact of US trade policies on consumer confidence and capital spending plans, which could hinder GDP growth. Moreover, the dollar’s reliability is under scrutiny as US tariffs threaten its status as a reserve currency, leading some foreign investors to liquidate dollar assets.

Market attention will remain on US trade policy throughout this shorter holiday week. Later today, Fed Chair Powell is set to speak before the Economic Club of Chicago about the economic outlook. Expectations for March housing starts are inclined towards a -5.7% month-over-month decrease to 1.416 million, while building permits are forecasted to fall -0.6% month-over-month to 1.450 million.

The market is currently pricing in a 19% chance for a -25 basis point rate cut following the May 6-7 FOMC meeting.

Q1 earnings reporting commenced last Friday with major US banks releasing results. Bloomberg Intelligence reports that the consensus for Q1 year-over-year earnings growth for S&P 500 stocks stands at +6.7%, down from earlier expectations of +11.1% in November. Full-year 2025 corporate profit growth for the S&P 500 is projected at +9.4%, revised down from +12.5% in January.

Globally, stock markets are mixed today. The Euro Stoxx 50 is down -0.82%. China’s Shanghai Composite increased by +0.26%, reaching a 1.5-week high, while Japan’s Nikkei 225 closed down -1.01%.

Interest Rates

June 10-year T-notes (ZNM25) have declined by -4 ticks, with the 10-year T-note yield up by +1.7 basis points to 4.350%. The early gains in T-notes waned after stronger-than-expected economic data on retail sales, manufacturing production, and the NAHB housing market index. Additional supply pressures are influencing T-notes as the Treasury prepares to auction $13 billion of 20-year T-bonds later today.

T-notes initially benefited from an uptick, thanks to a rally in European government bonds following lower-than-expected March consumer prices in the UK. Notably, US Deputy Treasury Secretary Faukender indicated on Tuesday that a potential rule change could reduce trading costs for banks and improve liquidity in the Treasury market.

Today, European bond yields are trending lower. The 10-year German bund yield dropped to a one-week low of 2.479%, down -2.5 basis points to 2.510%. The 10-year UK gilt yield fell to a one-week low of 4.571%, decreasing by -2.0 basis points to 4.628%.

UK March CPI rose by 2.6% year-over-year, slightly below expectations of +2.7%. Meanwhile, March core CPI increased by +3.4%, aligning with predictions.

Swaps are reflecting a 99% probability of a -25 basis point rate cut by the ECB at the upcoming April 17 policy meeting.

US Stock Movers

Chip stocks are experiencing declines today, which is affecting the broader market. Nvidia (NVDA) is leading the losses in the Dow Jones Industrials and Nasdaq 100, dropping over -6% after it was barred from selling its H20 chip to China. Advanced Micro Devices (AMD) also saw a drop exceeding -6%, while ASML Holding NV (ASML) has fallen more than -5% following disappointing Q1 bookings. Additionally, Applied Materials (AMAT) and KLA Corp (KLAC) are both facing losses today.