The S&P 500 Index ($SPX) (SPY) is down -0.70% today, while the Dow Jones Industrials Index ($DOWI) (DIA) shows a slight gain of +0.05%. Meanwhile, the Nasdaq 100 Index ($IUXX) (QQQ) has decreased by -1.53%. June E-mini S&P futures (ESM25) are also down -0.64%, along with June E-mini Nasdaq futures (NQM25), which are down -1.54%.

Today’s stock markets are continuing last week’s decline. The S&P 500 and Nasdaq 100 dropped to their lowest levels in six and a half months, respectively, while the Dow Jones Industrials Index hit a two-week low. Globally, stock markets are trending downward as concerns rise over the potential effects of U.S. tariffs on the economy. The U.S. is set to introduce reciprocal tariffs starting Wednesday. President Trump announced on Sunday that he plans to impose tariffs on “all countries,” which has stirred speculation about the broad application of these tariffs.

This uncertainty around tariffs has sparked risk aversion in financial markets, prompting investors to buy safe-haven assets like government debt and gold, which reached a new all-time high today.

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Stocks saw a partial recovery after the U.S. March MNI Chicago PMI unexpectedly rose to a 16-month high. Additionally, the 10-year Treasury note yield has decreased to a one-week low, providing some underlying support for the markets. Economic news from China also brought additional support, with the March manufacturing PMI increasing by +0.3 to 50.5, surpassing expectations of 50.4, marking its strongest report in a year. Furthermore, the non-manufacturing PMI from China rose +0.4 to 50.8, again outperforming the anticipated figure of 50.6.

Specifically, the U.S. March MNI Chicago PMI increased by +2.1, reaching a 16-month high of 47.6, contrary to predictions that it would decline to 45.0. However, on a more negative note, the U.S. Dallas Fed March manufacturing activity outlook survey unexpectedly dropped by -8.0, reaching an 8-month low of -16.3, which is weaker than the forecast of an increase to -5.0.

Over the past month, stocks have been pressured due to concerns that U.S. tariffs will hinder economic growth and corporate earnings. On March 4, President Trump imposed a 25% tariff on goods from Canada and Mexico and doubled tariffs on Chinese goods from 10% to 20%. Subsequently, on March 8, he reiterated plans for reciprocal tariffs and additional sector-specific tariffs on foreign nations to be implemented by April 2. Last Wednesday, Trump signed a proclamation to impose a 25% tariff on U.S. auto imports starting April 3, with expansion to include automobile parts made outside the U.S. by May 3, emphasizing that these tariffs are “permanent” without the likelihood of exceptions.

This week, markets are anticipating several key economic indicators. The U.S. March ISM manufacturing index is expected to decline by -0.8 to 49.5 on Tuesday. On Wednesday, the March ADP employment change is projected to rise by +120,000. Thursday will bring the March ISM services index, anticipated to decrease by -0.5 to 53.0, while Friday’s March nonfarm payrolls are expected to show an increase of +138,000, with the unemployment rate remaining steady at 4.1%. Average hourly earnings for March are forecasted to rise by +0.3% month-over-month and +4.0% year-over-year, remaining unchanged from February. Fed Chair Powell is also scheduled to speak at the Society for Advancing Business Editing and Writing Conference regarding the economic outlook.

The markets are currently pricing in a 21% likelihood of a -25 basis point rate cut following the May 6-7 FOMC meeting.

Internationally, stock markets are largely lower today. The Euro Stoxx 50 is down -1.65%, reaching a 1-3/4 month low. China’s Shanghai Composite Index decreased by -0.46%, landing at a 3-1/2 week low. Japan’s Nikkei 225 fell sharply by -4.05%, marking its lowest point in six and a half months.

Interest Rates

June 10-year T-notes (ZNM25) are currently up +6 ticks, with the yield falling -3.3 basis points to 4.217%. Today’s T-notes reached a 2-1/2 week high as the yield dropped to a one-week low of 4.182%. The appeal of T-notes is rising with the potential for tariffs to trigger an economic slowdown, leading to ongoing interest rate cuts by the Federal Reserve. Additionally, the decline in global equity markets has prompted safe-haven buying of T-notes. However, T-notes pulled back from their peak levels following the surprising rise in the U.S. March MNI Chicago PMI.

European bond yields are also declining today. The 10-year German bund yield fell to a 3-1/2 week low of 2.659%, down -2.2 basis points to 2.705%. The 10-year UK gilt yield dropped to a one-week low of 4.641%, reflecting a decrease of -2.1 basis points to 4.673%.

The German March CPI (harmed using EU standards) eased down to +2.3% year-over-year from 2.6% in February, falling short of expectations for +2.4% and marking the slowest increase in six months. Retail sales for February in Germany increased by +0.8% month-over-month, exceeding forecasts for no change, which is the largest rise in five months. Currently, swaps are indicating an 86% likelihood of a -25 basis point rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Today’s market decline is particularly pronounced among the Magnificent Seven stocks. Tesla (TSLA) is down more than -5%, closely followed by Nvidia (NVDA), down over -4%. Amazon.com (AMZN) has dropped more than -3%, while Microsoft (MSFT) and Meta Platforms (META) have both lost more than -2%. Alphabet (GOOGL) rounds out the group with a loss exceeding -1%.

Chip manufacturers are also facing declines, weighing on the broader market. Broadcom (AVGO) and Marvell Technology (MRVL) have both fallen by over -4%, with ARM Holdings Plc (ARM) and Micron Technology (MU) down more than -3%. Other notable mentions include ON Semiconductor and ASML Holding NV, both down more than -2%, while several others such as Advanced Micro Devices (AMD) and Intel (INTC) are down by more than -1%.

Airline stocks have taken a hit after Virgin Atlantic Airways’ CEO warned of diminishing U.S. demand for travel to the UK, as ticket sales from the U.S. have been declining. Consequently, United Airlines Holdings (UAL) has dropped more than -5%, and Alaska Air Group (ALK) is down more than -4%. Delta Air Lines (DAL) and American Airlines Group (AAL) are both down over -3%, while Southwest Airlines (LUV) is down more than -1%.

Moderna (MRNA) has plunged more than -11%, leading the S&P 500’s losses, amid broader declines in vaccine makers following the resignation of Peter Marks, a senior FDA regulator overseeing approvals for vaccines and biological products.

Innovative Industrial Properties (IIPR) has experienced a significant drop of more than -20% after Compass Point Research & trading LLC downgraded the stock from neutral to sell, setting a price target of $50.

Sarepta Therapeutics (SRPT) has also faced downward pressure, dropping more than -8% following a downgrade by RBC Capital Markets.