The S&P 500 Index ($SPX) (SPY) is down -2.50%, the Dow Jones Industrials Index ($DOWI) (DIA) has decreased by -2.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) is lower by -2.75%. June E-mini S&P futures (ESM25) show a decline of -2.24%, while June E-mini Nasdaq futures (NQM25) have dropped -2.64%.

Stock indexes are trending lower today, reversing some of the sharp gains seen on Wednesday. Although President Trump announced a 90-day pause on reciprocal tariffs affecting 56 countries, market sentiment remains cautious regarding the impact of US trade policies on the global economy, given that many tariffs persist. The uncertainties stemming from tariffs have notably diminished consumer confidence, prompting numerous companies to halt capital spending plans, which could adversely affect GDP growth. Additionally, escalating tensions in the US-China trade conflict have fueled economic uncertainty. On Wednesday, China retaliated by imposing 84% tariffs on US goods, prompting the US to increase tariffs on Chinese imports from 104% to 125%.

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After experiencing significant losses, US stock index futures recovered slightly today, supported by signs of slowing inflation. The latest US March Consumer Price Index (CPI) report, excluding food and energy, reflected a rise of only +2.4% year-over-year, lower than the expected increase of +2.5% and the slowest pace in four years. Furthermore, the labor market remains resilient, with weekly jobless claims aligning with expectations.

The number of weekly initial unemployment claims rose by +4,000 to reach 223,000, aligning with forecasts. In contrast, weekly continuing claims fell by -43,000 to 1.850 million, indicating a stronger labor market compared to expectations of 1.886 million.

The US March CPI report recorded a +2.4% year-over-year increase, which is below the anticipated +2.5% and marks the smallest rise in six months. The CPI excluding food and energy rose by +2.8% year-over-year, also weaker than the forecast of +3.0% and the slowest growth in four years.

Deflationary signals from China, the world’s second-largest economy, have raised concerns over weak demand, further impacting global growth prospects. China’s March CPI fell -0.1% year-over-year, diverging from expectations of stability, and the March Producer Price Index (PPI) decreased by -2.5%, compared to forecasted declines of -2.3%.

On Wednesday, President Trump introduced a temporary 90-day halt on increased tariffs against 56 nations; however, a new 10% baseline tariff remains intact for nearly all countries. That same day, the European Union announced a similar 90-day delay in implementing 25% tariffs on $21 billion worth of US goods imported to Europe.

Concerns regarding economic growth and corporate earnings have pressured stocks recently. On March 4, President Trump instituted a 25% tariff on goods from Canada and Mexico and raised tariffs on Chinese imports to 20% from 10%. Furthermore, he signed a proclamation last Wednesday to impose a 25% tariff on US auto imports, initially targeting fully assembled vehicles imported from outside the country, which will expand by May 3 to include automobile parts from abroad. Trump declared these tariffs as “permanent,” stating no interest in negotiating exceptions. A 10% baseline tariff for nearly all countries took effect last Saturday.

Currently, the markets estimate a 21% likelihood of a -25 basis point rate cut following the May 6-7 Federal Open Market Committee meeting, a decrease from 30% the previous week.

Looking ahead, market participants will focus on US trade policies this week. The March final-demand PPI report on Friday is expected to show a rise to +3.3% year-over-year, up from +3.2% in February, while the PPI excluding food and energy is forecasted to increase to +3.6% year-over-year from +3.4%. Furthermore, the University of Michigan’s April US consumer sentiment index is anticipated to drop to 54.0 from 57.0 in March.

The first quarter earnings season begins Friday, highlighted by results from major US banks. According to Bloomberg Intelligence, the consensus forecast calls for a +6.7% year-over-year growth in Q1 earnings for the S&P 500, which is a decline from the previously expected +11.1% growth noted last November. Projections for full-year 2025 corporate profits for the S&P 500 have decreased to +9.4%, down from earlier forecasts of +12.5% made in January.

Internationally, stock markets are performing well today. The Euro Stoxx 50 has surged by +5.53%, while China’s Shanghai Composite Index finished up +1.16%, and Japan’s Nikkei Stock 225 saw a significant increase of +9.13%.

Interest Rates

June 10-year T-notes (ZNM25) have risen by +16 ticks, with the 10-year T-note yield decreasing by -0.6 basis points to 4.326%. Speculation surrounding Wednesday’s announcement from President Trump regarding a pause in tariffs has led to a modest increase in T-notes as it is expected to enhance confidence in the US economy and curb foreign investors from offloading dollar-denominated assets, including stocks and Treasuries. Additionally, the slower-than-anticipated rise in US consumer prices bolsters T-note prospects. The drop in stock values has intensified demand for T-notes as a safe-haven investment. However, pressure from future supply remains as the Treasury prepares to auction $22 billion in 30-year T-bonds today as part of a broader auction package totaling $119 billion this week.

European bond yields are mixed today, with the 10-year German bund yield rising by +3.8 basis points to 2.629%, while the 10-year UK gilt yield has fallen by -9.6 basis points to 4.683%.

Market swaps currently indicate a 91% likelihood of a -25 basis point rate cut by the European Central Bank at the policy meeting scheduled for April 17.

US Stock Movers

The Magnificent Seven stocks are experiencing pressure, which is impacting the wider market. Tesla (TSLA) has plummeted more than -62%, while Nvidia (NVDA) has seen a decrease of over -5%. Other companies such as Apple (AAPL), Meta Platforms (META), and Amazon.com (AMZN) are all down by more than -3%. Microsoft (MSFT) is down more than -2%, and Alphabet (GOOGL) has fallen more than -1%.

Chip manufacturers are facing declines, placing additional strain on the overall market. Microchip Technology leads the downturn, down over -9% within the S&P 500 and Nasdaq 100. Other notable losers include ON Semiconductor (ON) and Micron Technology (MU), each down more than -6%, while Advanced Micro Devices (AMD), Marvell Technology (MRVL), and Analog Devices (ADI) have each declined over -5%. Additional companies such as NXP Semiconductors NV (NXPI), Lam Research (LRCX), GlobalFoundries (GFS), KLA Corp (KLAC), Broadcom (AVGO), and Texas Instruments (TXN) are also down by more than -4%.

Travel and leisure stocks are under significant pressure due to economic concerns. United Airlines Holdings (UAL), Norwegian Cruise Line Holdings (NCLH), and Carnival (CCL) have all decreased by over -7%. Further, Delta Air Lines (DAL), Royal Caribbean Cruises Ltd (RCL), Caesars Entertainment (CZR), and Expedia Group (EXPE) have seen drops exceeding -5%. Notably, Las Vegas Sands (LVS), Hilton Worldwide Holdings (HLT), and MGM Resorts International (MGM) have also declined similarly amid waning demand.