The S&P 500 Index ($SPX) (SPY) today is down -4.42%, the Dow Jones Industrial Index ($DOWI) (DIA) is down -3.72%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -5.11%. June E-mini S&P futures (ESM25) are down -4.10%, while June E-mini Nasdaq futures (NQM25) have decreased by -4.78%.

Stock indexes are in decline today, with the S&P 500, Nasdaq 100, and Dow Jones industrials falling to their lowest points in 6.5 months. This downward trend is driven by worries that President Trump’s trade policies might lead the US, and potentially the global economy, towards recession. Late Wednesday, President Trump announced reciprocal tariffs that exceeded expectations, negatively impacting stocks and the dollar and creating a risk-averse atmosphere in asset markets. Concern over these tariffs has led to a movement toward safer investments, as evidenced by a decline in European government bond yields to four-week lows and a drop in the 10-year Treasury note yield to a five and a half month low.

Stocks continued their downward trajectory today following a disappointing report on the US March ISM services index, which fell more than anticipated to a nine-month low.

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On Wednesday, President Trump stated the US would impose at least a 10% tariff on nearly all foreign countries, with higher reciprocal rates on about 60 nations. These new tariffs are set to take effect on April 5, with the increased rates commencing on April 9. Treasury Secretary Bessent also indicated there would be no room for negotiations. While specific industries, such as steel and automobiles, will be exempt from these new tariffs, Canada and Mexico will continue to face the previously announced 25% tariffs. In contrast, China will incur a 34% reciprocal tariff, raising its total tariffs to 67%. The EU will face a 20% reciprocal tariff, totaling 39%, while Japan’s tariffs will reach 46% with a 24% reciprocal rate.

The latest US labor market news presents mixed signals. Weekly initial unemployment claims unexpectedly decreased by 6,000 to 219,000, marking a seven-week low and suggesting a stronger labor market than the predicted increase to 225,000. Conversely, continuing claims rose by 56,000 to a three and a third year high of 1.903 million, exceeding expectations of 1.870 million, indicating challenges for those seeking to return to work.

Additionally, the US February trade deficit narrowed to -$122.7 billion from -$130.7 billion in January, which was better than the anticipated -$123.5 billion. The US March ISM services index also showed a decline of -2.7 to a nine-month low of 50.8, falling short of expectations of 52.9.

Recent months have seen stocks pressured by concerns that US tariffs could stifle economic growth and corporate earnings. Earlier in March, President Trump initiated 25% tariffs on goods from Canada and Mexico and escalated tariffs on Chinese products from 10% to 20%. The proclamation signed last Wednesday to implement a 25% tariff on US auto imports is now in effect. This will initially affect vehicles fully assembled outside the US and will expand by May 3 to include automobile parts. Mr. Trump described these tariffs as “permanent” and showed no interest in negotiations regarding exemptions.

This week, market focus will include responses to President Trump’s tariff plans. Analysts anticipate that March nonfarm payrolls will increase by +138,000, with the unemployment rate expected to remain unchanged at 4.1%. Furthermore, March average hourly earnings are projected to rise by +0.3% month-over-month and +4.0% year-over-year, consistent with February. On Friday, Fed Chair Powell is also scheduled to address the Society for Advancing Business Editing and Writing Conference regarding the economic outlook.

The markets currently suggest a 32% likelihood of a -25 basis point interest rate cut following the May 6-7 FOMC meeting.

Internationally, stock markets are experiencing declines today. The Euro Stoxx 50 has fallen to a two-month low, down -3.23%. China’s Shanghai Composite Index closed down -0.24%, and Japan’s Nikkei Stock 225 has tumbled to a seven and three-quarter month low, down sharply by -2.77%.

Interest Rates

June 10-year T-notes (ZNM25) today have risen by +1-10/32 points, with the 10-year T-note yield falling -11.2 basis points to 4.019%. Today, T-notes soared to a five and three-quarter month high, with the 10-year T-note yield dropping to a five and a half month low of 3.997%. This surge in T-notes arises from concerns that President Trump’s reciprocal tariffs will push the US economy into recession, thereby leading the Fed to continue reducing interest rates. Additionally, declines in global equity markets have intensified safe-haven buying for government debt. Furthermore, today’s -6% drop in crude oil prices to a two-week low has lowered inflation expectations, benefitting T-notes.

In Europe, bond yields are also decreasing. The 10-year German bund yield has fallen to a four-week low of 2.625%, down -8.0 basis points to 2.641%. The 10-year UK gilt yield has reached a four-week low of 4.517%, down -11.3 basis points to 4.527%.

The Eurozone’s March S&P composite PMI was revised upward by +0.5 to a seven-month high of 50.9 from the previously reported 50.4. Meanwhile, the Eurozone’s February PPI increased by +3.0% year-over-year, aligning with expectations and marking the fastest pace of increase in nearly two years.

The account of the ECB’s March 6 meeting revealed that policymakers are contemplating both a rate cut and a pause for their upcoming April meeting, depending on incoming data. Swaps indicate a 71% probability of a -25 basis point rate cut by the ECB at their April 17 policy meeting.

US Stock Movers

The significant selloff in the Magnificent Seven stocks is weighing heavily on the overall market today. Apple (AAPL) has fallen more than -8%, being one of the companies most exposed to tariff risks. Similarly, Amazon.com (AMZN) has dropped more than -8%, and Meta Platforms (META) is down over -7%. Additionally, Nvidia (NVDA) and Tesla (TSLA) are both down more than -6%, with Alphabet (GOOGL) falling over -3% and Microsoft (MSFT) dropping more than -2%.

Particularly, big tech companies face increased pressure as Europe threatens to retaliate against US tariffs, potentially imposing tariffs and restrictions on US tech and service firms, as well as banks.

Chip manufacturers are also experiencing sharp declines today. Microchip Technology (MCHP) has plummeted more than -14%, leading the Nasdaq 100’s losses, while Micron Technology (MU) has decreased by more than -11%. Other notable declines include Marvell Technology (MRVL), NXP Semiconductors NV (NXPI), and ON Semiconductor (ON), which are all down more than -8%. Broadcom (AVGO), Lam Research (LRCX), Analog Devices (ADI), and Qualcomm (QCOM) have also seen declines greater than -7%, while KLA Corp (KLAC), Applied Materials (AMAT), and Advanced Micro Devices (AMD) are down more than -6%.

Consumer stocks, especially retailers and apparel manufacturers that primarily source goods from Asia, are also experiencing significant losses. Ralph Lauren (RL) has fallen more than -17%, leading the S&P 500’s decrease, while Deckers Outdoors (DECK) is also down over -17%. Nike (NKE) has dropped more than -12%, leading losses among the Dow Jones Industrials.