Mixed Market Performance Amid Tariff Concerns and Economic Data
The S&P 500 Index ($SPX) (SPY) today has risen by +0.06%, while the Dow Jones Industrials Index ($DOWI) (DIA) has decreased by -0.20%. The Nasdaq 100 Index ($IUXX) (QQQ) shows a gain of +0.24%. In the futures market, June E-mini S&P futures (ESM25) are up +0.13%, and June E-mini Nasdaq futures (NQM25) have increased by +0.28%.
On this day, stock indexes have rebounded from early losses, showing mixed trading as a result of strength in the Magnificent Seven stocks. Initially, stocks opened lower in anticipation of Wednesday’s announcement regarding new U.S. tariffs. President Trump is expected to reveal the details of reciprocal tariffs at 3 PM EST. Stock index futures extended their declines after a report from the Washington Post suggested that President Trump might propose tariffs of approximately 20% on most imports to the U.S. This news has generated a risk-off sentiment across asset markets, leading to safe-haven demand for government debt and gold. Today, the yield on the 10-year T-note dropped to a four-week low, while gold prices have surged to a record high.
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Economic data released today added to concerns about stagflation, negatively impacting stocks. February’s JOLTS job openings fell more than anticipated, while March’s ISM manufacturing index declined to a four-month low. Inflation worries intensified as the March ISM prices paid sub-index rose at the fastest pace in nearly three years.
Specifically, U.S. February JOLTS job openings decreased by -194,000 to stand at 7.568 million, which was lower than the expected 7.658 million. In March, the ISM manufacturing index dropped -1.3 points to a four-month low of 49.0, contrary to expectations of 49.5. Additionally, the ISM prices paid sub-index increased by +7.0, reaching a 2-3/4 year high of 69.4, surpassing expectations of 64.6. While construction spending rose by +0.7% month-over-month in February, outpacing the anticipated +0.3%.
Over the past month, stocks have faced pressure driven by fears that U.S. tariffs may hinder economic growth and corporate earnings. On March 4, President Trump initiated 25% tariffs on goods from Canada and Mexico and raised tariffs on Chinese goods from 10% to 20%. On March 8, he reiterated plans to impose reciprocal tariffs and additional sector-specific tariffs by April 2. Last Wednesday, the President enacted a proclamation to introduce a 25% tariff on U.S. auto imports effective April 3, initially targeting vehicles fully assembled outside the U.S. These tariffs, deemed “permanent” by Trump, are projected to encompass auto parts by May 3.
Market participants are focused on upcoming economic indicators, including Wednesday’s ADP employment change, which is projected to rise by +120,000. On Thursday, the ISM services index is expected to dip by -0.5 to 53.0, and Friday’s nonfarm payroll report is anticipated to show an increase of +138,000 with the unemployment rate estimated to hold steady at 4.1%. The average hourly earnings for March are expected to be +0.3% month-over-month and +4.0% year-over-year, unchanged from February. Moreover, Fed Chair Powell is scheduled to discuss the economic outlook on Friday at the Society for Advancing Business Editing and Writing Conference.
Currently, markets are pricing in a 21% probability of a -25 basis point rate cut following the May 6-7 FOMC meeting.
International stock markets are showing slight advances today. The Euro Stoxx 50 index is up +0.44%. China’s Shanghai Composite Index has closed up +0.38%. Meanwhile, Japan’s Nikkei 225 has rebounded from a six-and-a-half month low, ending the day with a minor gain of +0.02%.
Interest Rates
June 10-year T-notes (ZNM25) have risen by +22 ticks today. The 10-year T-note yield decreased by -5.9 basis points to 4.146%. T-notes surged to a four-week high as the 10-year yield fell to a low of 4.131%. This rally is fueled by the anticipation that U.S. tariffs could trigger an economic recession, leading the Federal Reserve to lower interest rates further. T-notes are also benefitting from today’s strength in European government bonds. Recent economic figures, including the steeper-than-expected decline in February JOLTS job openings and the contraction in the ISM manufacturing index, added further pressure on yields.
In Europe, bond yields are trending downward. The 10-year German bund yield has hit a three-and-a-half week low of 2.656% and has decreased by -6.7 basis points to 2.671%. The 10-year UK gilt yield has fallen to a one-and-a-half week low of 4.601%, down -4.8 basis points to 4.627%.
The Eurozone March S&P manufacturing PMI was revised downwards by -0.1 to 48.6 from the previously reported 48.7. The Eurozone’s March CPI increased by +2.2% year-over-year, aligning with expectations and marking the slowest growth rate in five months. The March core CPI rose by +2.4% year-over-year, falling short of expectations of +2.5% and indicating the smallest increase in three years. Interestingly, the Eurozone’s February unemployment rate unexpectedly dropped by -0.1 to a record low of 6.1%, contrasting predictions of no change at 6.2%. Swaps currently reflect a 79% probability of a -25 basis point rate cut by the ECB at the April 17 policy meeting.
US Stock Movers
Strength in the Magnificent Seven stocks is providing support to the overall market today. Tesla (TSLA) has gained over +4%, leading the S&P 500 and Nasdaq 100, following its addition to Wells Fargo Securities’ Q2 Tactical Ideas list. Other notable mentions include Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT), each rising by more than +1%. Additionally, Amazon.com (AMZN) is up +0.37%, while Apple (AAPL) has improved by +0.18%.
On the downside, chipmakers are experiencing declines, putting pressure on the broader market. Intel (INTC) is down over -2%, leading the Nasdaq 100 losers, alongside NXP Semiconductors NV (NXPI), ON Semiconductor (ON), Advanced Micro Devices (AMD), GlobalFoundries (GFS), Applied Materials (AMAT), ARM Holdings Plc (ARM), Analog Devices (ADI), Microchip Technology (MCHP), Lam Research (LRCX), Texas Instruments (TXN), and Qualcomm (QCOM), all down by more than -1%.
Airline stocks are also struggling due to downgrades. Delta Air Lines (DAL) has dropped by more than -4% following a downgrade by Jeffries from buy to hold. Similarly, United Airlines Holdings (UAL) and American Airlines Group (AAL) are each experiencing declines of more than -4%. Southwest Airlines (LUV) has fallen over -3% after Jeffries downgraded it to underperform from hold with a price target of $28. Alaska Air Group (ALK) is down more than -2%.
Johnson & Johnson (JNJ) has tumbled over -4%, leading the S&P 500 and Dow Jones Industrials losers after a federal judge denied the company’s third request to use bankruptcy of a unit to address baby powder cancer claims.
Genuine Parts Co (GPC) has decreased by more than -1% after Goldman Sachs downgraded its stock from neutral to sell with a target price of $114.
In contrast, CyberArk (CYBR) and Crowdstrike (CRWD) have grown by over +1% after Stephens initiated coverage on both stocks with an overweight recommendation. First Watch Restaurant Group (FWRG) has surged by more than +7% following a Cowen upgrade from hold to buy, setting a target price of $22. Keurig Dr Pepper (KDP) has increased by more than +1% after Morgan Stanley upgraded its stock to overweight from equal weight, pricing it at $40. Ulta Beauty (ULTA) and Shake Shack (SHAK) have also seen positive adjustments, with their stocks rising by more than +1% following upgrades from Goldman Sachs and Loop Capital Markets, respectively.
Earnings Reports (4/1/2025)
Adverum Biotechnologies Inc (ADVM), Golden Matrix Group Inc (GMGI), Lifezone Metals Ltd (LZM), Cino Inc (NCNO), Novagold Resources Inc (NG), Sandisk Corp/DE (SNDK), Ultralife Corp (ULBI).
On the date of publication, Rich Asplund did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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