The S&P 500 Index ($SPX) (SPY) is currently up +0.60%, the Dow Jones Industrials Index ($DOWI) (DIA) has gained +0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) shows an increase of +0.75%. Additionally, June E-mini S&P futures (ESM25) are up +0.65%, while June E-mini Nasdaq futures (NQM25) are up +0.84%.

Today’s stock indexes are seeing moderate gains, driven by optimism that President Trump may adopt a less aggressive approach to his tariff policies. On Monday, President Trump indicated he is considering temporary exemptions on tariffs for imported vehicles and parts, allowing auto companies extra time to strengthen U.S. manufacturing operations.

Today’s U.S. economic indicators surpassed expectations, further supporting stock movements. The April Empire manufacturing survey revealed general business conditions improving by +11.9 to -8.1, better than the anticipated -13.5. However, the March import price index excluding petroleum remained flat month-over-month, falling short of the expected increase of +0.3%.

Despite these positive economic signals, concerns over the ongoing U.S.-China trade conflict are tempering stock gains. Boeing shares have dipped over -1% following reports that Chinese airlines have halted further deliveries of Boeing jets. Simultaneously, the U.S. Commerce Department announced investigations into the national security implications of imports in the semiconductor and pharmaceutical sectors, which may lead to potential tariff impositions.

Comments from Atlanta Fed President Raphael Bostic suggest a preference for maintaining current monetary policy. He noted, “The specific place that the economy will land depends critically on the details of where policy lands.” This highlights the need for clarity regarding President Trump’s trade policies before the Fed feels comfortable adjusting interest rates.

Recently, President Trump declared a temporary exemption for consumer electronics under his reciprocal tariffs and a baseline 10% global tariff. Nevertheless, the existing 20% tariff on electronics from China remains in effect. Furthermore, last Wednesday President Trump announced a 90-day suspension of higher reciprocal tariffs on 56 nations but retained the new 10% baseline tariff universally. The EU also opted to delay implementation of 25% tariffs on $21 billion worth of U.S. goods for 90 days.

Over the past five weeks, stocks have faced pressure amid fears that U.S. tariffs could harm economic growth and corporate earnings. President Trump imposed 25% tariffs on Canadian and Mexican goods on March 4 and increased the tariff on Chinese goods from 10% to 20%. On April 2, he signed a proclamation for a 25% tariff on U.S. auto imports, initially aimed at vehicles fully assembled outside the U.S. By May 3, this will also include automobile parts. Trump characterized these tariffs as “permanent” and expressed disinterest in negotiating exceptions. On April 5, a 10% baseline tariff for nearly all nations took effect. In retaliation, China raised tariffs on all U.S. goods to 125%, an increase from 84%.

The uncertainty surrounding U.S. tariffs impacts the dollar negatively while buoying gold prices. Last Friday, the dollar index fell to a three-year low, concurrently with gold reaching an all-time high. Market participants are growing increasingly uneasy about how U.S. trade policies are diminishing consumer confidence, leading numerous companies to pause capital spending plans—detrimental to GDP growth. Additionally, the dollar’s status as a reserve currency faces challenges as foreign investors begin to liquidate their dollar assets amid tariff tensions.

As we enter a holiday-shortened trading week, traders will keep a close eye on updates regarding U.S. trade policy. Key economic data is set to release on Wednesday, predicting an increase in March retail sales by +1.4% month-over-month, while retail sales excluding autos are expected to rise by +0.4%. Also, March manufacturing production is anticipated to increase by +0.3%. Fed Chair Jerome Powell will address the Economic Club of Chicago on Wednesday, where he will discuss the economic outlook. On Thursday, March housing starts are forecasted to decrease by -5.7% to 1.416 million, and March building permits are expected to drop by -0.6% to 1.450 million.

Currently, markets assess a 19% probability of a -25 basis point rate cut after the Federal Open Market Committee meeting on May 6-7.

The first-quarter earnings season commenced last Friday with major U.S. banks reporting results. According to Bloomberg Intelligence, the consensus for Q1 year-over-year earnings growth for S&P 500 companies stands at +6.7%, a decline from the earlier prediction of +11.1% in November. Estimates for full-year corporate profits in 2025 have adjusted to a +9.4% increase, down from a previous forecast of +12.5%.

In international markets, stock indexes are also trending upward. The Euro Stoxx 50 has risen by +0.80%. China’s Shanghai Composite finished up +0.15%, and Japan’s Nikkei 225 closed with a +0.84% gain.

Interest Rates

June 10-year T-notes (ZNM25) are up +2 ticks today, with the 10-year T-note yield decreasing by -0.4 basis points to 4.370%. Signs of easing price pressures, reflected in the lower-than-expected rise of the U.S. March import price index ex-petroleum, have aided T-note modest gains. However, upward movement is restrained due to the ongoing weakness in 10-year German bunds. Comments from Atlanta Fed President Bostic also weighed on T-notes after he stated that he supports maintaining current interest rates amid uncertainties in U.S. trade policies.

In European markets, bond yields are mixed. The yield on the 10-year German bund is up +2.6 basis points to 2.537%, while the yield on the 10-year UK gilt has decreased by -1.0 basis point to 4.650%.

In Eurozone economic news, February industrial production rose +1.1% month-over-month, surpassing expectations of a +0.3% growth and marking the largest increase in six months. Conversely, the German April ZEW survey indicated economic growth expectations dropped -65.6 points to -14.0, a 1-3/4 year low, and below the expected level of 10.0.

The swap markets are currently pricing in a 96% chance of a -25 basis point rate cut by the European Central Bank during its policy meeting on April 17.

U.S. Stock Movers

Chip manufacturers are experiencing upward momentum today, contributing positively to the broader market. Notable gainers in this sector include Marvell Technology (MRVL), Advanced Micro Devices (AMD), Microchip Technology (MCHP), Lam Research (LRCX), ON Semiconductor Corp (ON), NXP Semiconductors NV (NXPI), GlobalFoundries (GFS), and Micron Technology (MU), all rising over +1%.

Hewlett Packard Enterprise (HPE) leads the S&P 500 with a gain of over +6% following news that Elliott Investment Management has invested $1.5 billion in the company.

In the Nasdaq 100, Netflix (NFLX) has risen over +3% after a Wall Street Journal report indicated the company aims to double its revenue and reach a $1 trillion market capitalization by 2030.

Bank of America (BAC) shares are up over +4% after they reported Q1 net interest income of $14.44 billion, exceeding the consensus forecast of $14.36 billion.