U.S. Markets Surge Amid Tariff News and M&A Activity

The S&P 500 Index ($SPX) (SPY) has risen by +1.58%, while the Dow Jones Industrials Index ($DOWI) (DIA) has increased by +1.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.96%. The June E-mini S&P futures (ESM25) are up +1.62%, and June E-mini Nasdaq futures (NQM25) have gained +1.95%.

Today, stock indexes are sharply higher, with the S&P 500, Dow Jones Industrials, and Nasdaq 100 reaching two-week highs. This rally comes in response to reports indicating that new U.S. reciprocal tariffs will be more focused and targeted than earlier suggested, with some countries potentially exempt. Furthermore, existing tariffs on steel and other metals may not accumulate as previously expected. President Trump is scheduled to announce these tariffs during a “Liberation Day” event on April 2. This announcement is anticipated to include an expansion of reciprocal tariffs but in a more concentrated manner, which has helped alleviate market fears regarding potential disruptions to global trade and growth.

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Strength from the “Magnificent Seven” tech stocks and a notable rise in chip stocks are propelling the overall market upward. Additionally, a surge in merger and acquisition activity is supporting stocks, with James Hardie Industries agreeing to acquire Azek Co for $8.75 billion in cash. In a related deal, Clearlake Capital Group announced plans to acquire Dun & Bradstreet Holdings for approximately $4.1 billion.

Mixed economic indicators in the U.S. have impacted stocks today. The February Chicago Fed national activity index unexpectedly increased to +0.26, landing at 0.18, which is above the forecast of a decline to -0.17. Conversely, the March S&P Global Manufacturing PMI fell by -2.9 to 49.8, which was below the expected figure of 51.7. However, the March S&P Global Services PMI rose by +3.3 to 54.3, outperforming expectations that called for no change at 51.0.

This week’s market focus will center on several key reports. On Tuesday, February new home sales are expected to rise by +3.5% month-over-month to 680,000 units, along with the Conference Board’s March consumer confidence index projected to drop -4.7 to 93.6. On Wednesday, the February report on non-defense capital goods new orders excluding aircraft is expected to show no month-over-month change. Thursday’s Q4 GDP growth is anticipated to remain unrevised at +2.3% annualized quarter-over-quarter, with March pending home sales predicted to rise by +1.0%. On Friday, economists expect February personal spending to increase by +0.5%, personal income by +0.4%, and the February core PCE price index, the Fed’s key measure of inflation, to rise by +0.3% month-over-month and +2.7% year-over-year. Additionally, the revised March University of Michigan consumer sentiment index is expected to stay at 57.9.

Geopolitical tensions in the Middle East are exerting a negative influence on stocks. Israel has resumed airstrikes on Gaza, effectively ending a two-month ceasefire with Hamas. Israeli Prime Minister Netanyahu has stated intentions to “act with increasing military strength” to free hostages and disarm Hamas. The U.S. is also conducting strikes against Yemen’s Houthi rebels, with Defense Secretary Hegseth asserting that actions would be “unrelenting” until the group stops its attacks on vessels in the Red Sea. In response, the Houthi rebels have threatened to retaliate.

Stocks have faced pressure recently amid concerns that U.S. tariffs could adversely affect economic growth and corporate earnings. On March 4, President Trump imposed a 25% tariff on imports from Canada and Mexico while increasing tariffs on Chinese goods from 10% to 20%. He reinforced plans to implement reciprocal tariffs on foreign nations on April 2.

The markets currently estimate a 16% chance of a -25 basis point rate cut following the May 6-7 FOMC meeting.

Overseas stock markets display a mixed trend today. The Euro Stoxx 50 is up +0.16%. China’s Shanghai Composite Index has rebounded from a recent 1.5-week low, closing up +0.15%. Meanwhile, Japan’s Nikkei Stock 225 slipped -0.18%.

Interest Rates

June 10-year T-notes (ZNM25) have fallen -15 ticks. The yield on the 10-year T-note is up +7.3 basis points, reaching 4.319%. T-notes are experiencing pressure today as stocks rally, driven by reports that President Trump’s April 2 reciprocal tariffs will be more targeted than previously anticipated, thereby easing inflation concerns. Additionally, rising yields on 10-year German bunds are impacting T-note prices. Supply pressures are another factor weighing on T-notes, as the Treasury prepares to auction $211 billion worth of T-notes and floating-rate notes this week, starting with a $69 billion auction of 2-year T-notes set for Tuesday. Losses for T-notes have increased as inflation expectations rise, with the 10-year breakeven inflation rate reaching a 2.5-week high of 2.355%.

European bond yields show a mixed performance today. The 10-year German bund yield rose by +2.1 basis points to 2.786%, while the 10-year UK gilt yield fell from a one-week high of 4.742%, decreasing by -0.1 basis points to 4.712%.

In the Eurozone, the March S&P Manufacturing PMI climbed by +1.1 to a two-year high of 48.7, exceeding expectations of 48.2. Conversely, the UK’s March S&P Manufacturing PMI unexpectedly declined by -1.7 to 44.6, falling short of forecasts for an increase to 47.2 and marking the steepest contraction in 1.5 years. ECB Executive Board member Cipollone noted that the case for continued interest rate cuts has strengthened since the last decision earlier this month.

Swaps currently indicate a 65% probability of a -25 basis point rate cut by the ECB in the upcoming April 17 policy meeting.

US Stock Movers

The “Magnificent Seven” stocks are driving the market higher today. Tesla (TSLA) leads S&P 500 and Nasdaq 100 gainers, up more than +8%. Nvidia (NVDA) follows closely, climbing by over +3% in the Dow Jones Industrials. Both Amazon.com (AMZN) and Meta Platforms (META) have also risen more than +3%. Alphabet (GOOGL) is up by more than +1%, while Apple (AAPL) gained +0.74% and Microsoft (MSFT) increased by +0.22%.

Chip stocks are bouncing back today, offering additional support to the market. Advanced Micro Devices (AMD) and ARM Holdings Plc (ARM) are each up more than +5%. Other notable gainers include ON Semiconductor (ON), Microchip Technology (MCHP), NXP Semiconductors NV (NXPI), and Analog Devices (ADI), all rising more than +4%. Additionally, KLA Corp (KLAC), Lam Research (LRCX), and Texas Instruments (TXN) have experienced gains exceeding +3%.

Stocks connected to cryptocurrency are also performing well, as Bitcoin’s price has increased by more than +4% to a two-week high. Consequently, Coinbase Global (COIN), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) have all risen by more than +4%.

Azek Co (AZEK) is seeing a significant boost of over +12% following the acquisition announcement from James Hardie Industries for $8.75 billion in cash.

Coherent Corp (COHR) has surged by more than +8% after Raymond James upgraded the stock.