Stocks Mixed as President Trump Ramps Up Tariffs on Canada

In afternoon trading, the S&P 500 Index ($SPX) (SPY) is up +0.01%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.53%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.64%.  

In the morning session, the stock indexes were lower, with the S&P 500 and Dow Jones Industrials falling to 5-3/4 month lows. Stocks slipped after President Trump said he would increase the tariff on US imports of steel and aluminum from Canada to 50% from 25%, effective Wednesday, in retaliation for Ontario placing a 25% export tariff on electricity sent to the US.  Mr. Trump also said he would “substantially increase” tariffs on Canada on April 2 if it does not drop tariffs on dairy products and other US goods. 

However, the indexes have rallied off their lows in the afternoon.

Stocks saw some support after Bloomberg reported that President Trump will meet with the Business Roundtable, including top US business executives, later today.  Also, a recovery in the Magnificent Seven stocks today is providing some support for the broader market.

Today’s US economic news showed strength in the labor market that supported stocks after the Jan JOLTS job openings rose +232,000 to 7.74 million, stronger than expectations of no change at 7.60 million.

Verizon Communications is down more than -6% to lead telecommunication stocks lower and weigh on the Dow Jones Industrials.  Also, Delta Air Lines is down more than -7% and is weighing on travel stocks after cutting its profit expectations for Q1, citing weakening travel demand. 

Stocks have been under pressure over the past week due to fears that US tariffs will start a global trade war that will weaken economic growth and corporate earnings.  Last Tuesday, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  However, Mr. Trump granted US automakers a one-month tariff exemption and exempted tariffs for one month on Canada and Mexico for all goods and services compliant with the United States-Mexico-Canada Agreement (USMCA). However, Mr. Trump reiterated that he would impose reciprocal tariffs on foreign nations on April 2, as planned.

Market attention this week will focus on Wednesday’s Feb US CPI report, which is expected to ease slightly to +2.9% y/y from +3.0% y/y in Jan.  The Feb core CPI is expected to ease to +3.2% y/y from +3.3% y/y in Jan.  Also, US trade policies will be in focus, with 25% tariffs on US imports of steel and aluminum scheduled to take effect on Wednesday. On Thursday, the Feb final-demand PPI is expected to ease to +3.2% y/y from +3.5% y/y in Jan.  On Friday, the University of Michigan’s March consumer sentiment index is expected to fall -1.2 to 63.5.  Finally, the markets will also see if Congress can approve a spending bill to avert a government shutdown ahead of a March 15 deadline.

The markets are discounting the chances at 4% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are mixed.  The Euro Stoxx 50 fell to a 1-month low and is down -1.36%.  China’s Shanghai Composite Index closed up +0.41%.  Japan’s Nikkei Stock 225 fell to a 5-3/4 month low and closed down by -0.64%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +2 ticks.  The 10-year T-note yield is down -1.3 bp at 4.200%.  June T-notes today recovered from early losses and turned higher after stocks retreated when President Trump ramped up tariffs on Canada.  Also, declining inflation expectations boosted T-notes after the 10-year breakeven inflation rate fell to a 3-month low today of 2.265%.

T-note prices today initially moved lower after the US Jan JOLTS job openings rose more than expected, a hawkish factor for Fed policy.  Also, supply pressures are weighing on T-notes as the Treasury later today will auction $58 billion of 3-year T-notes as part of this week’s $119 billion auction package of T-notes and T-bonds.   

European bond yields today are moving higher.  The 10-year German bund yield is up +3.4 bp to 2.867%.  The 10-year UK gilt yield is up +0.6 bp to 4.650%.

Swaps are discounting the chances at 51% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Magnificent Seven stocks today are moving higher, recovering some of Monday’s plunge.  Tesla (TSLA) (TSLA) is up more than +3% and Nvidia (NVDA) is up more than +2%.  Also, Amazon.com (AMZN), Meta Platforms (META), and Microsoft (MSFT) are up more than +1%.

Travel stocks are under pressure today, led by an -8% fall in Delta Air Lines (DAL) after cutting its Q1 adjusted EPS forecast to 30 cents-50 cents from a previous estimate of 70 cents-$1.00, well below the consensus of 83 cents.  Also, Mariott International (MAR), Norwegian Cruise Line Holdings (NCLH), and United Airlines Holdings (UAL) are down more than -4%.  In addition, Carnival (CCL), Royal Caribbean Cruises Ltd (RCL), Hilton Worldwide Holdings (HLT), and MGM Resorts International (MGM) are down more than -3%.

Telecommunication stocks are falling today, led by a -6% fall in Verizon Communications (VZ) to lead losers in the Dow Jones industrials after company executives said Q1 is “challenging” from a competitive standpoint.  AT&T (T) and T-Mobile US (TMUS) are also down more than -3%. 

Chip stocks are sliding today to weigh on the overall market. GlobalFoundries (GFS) is down more than -7% to lead losers in the Nasdaq 100.  Also, ON Semiconductor (ON) is down more than -4%, and NXP Semiconductors NV (NXPI), Microchip Technology (MCHP), and Texas Instruments (TXN) are down more than -3%.  In addition, Applied Materials (AMAT), Intel (INTC), KLA Corp (KLAC), and Qualcomm (QCOM) are down more than -2%.

Teradyne (TER) is down more than -17% to lead losers in the S&P 500 after forecasting Q2 revenue flat to down -10% q/q.

Oracle (ORCL) is down more than -5% after reporting Q3 adjusted revenue of $14.13 billion, weaker than the consensus of $14.39 billion. 

Kohl’s (KSS) is down more than -19% after projecting comparable sales this year will drop -6%, much weaker than the consensus of -0.55%. 

Ferguson Enterprises (FERG) is down more than -4% after reporting Q2 US adjusted operating profit of $455 million, below the consensus of $485.1 million. 

Cybersecurity stocks are climbing today after Elon Musk claimed that a massive cyberattack on X caused the site to be periodically offline on Monday.  Crowdstrike Holdings (CRWD) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100.  Also, Zscaler (ZS) is up more than +4%, Palo Alto Networks (PANW) is up more than +3%, and Fortinet (FTNT) is up more than +2%. 

Southwest Airlines (LUV) is up more than +6% to lead gainers in the S&P 500  after accelerating the completion of its $2.5 billion share repurchase program to July 2025 and announcing the end of its free checked-bag policy. 

GE Healthcare (GEHC) is up more than +2% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $100.   

Elevance Health (ELV) is up more than +2% after forecasting full-year adjusted EPS of $34.15-$24.85, the midpoint above the consensus of $34.45.

ASML Holding NV (ASML) is up more than +1% after signing a five-year strategic partnership agreement with Imec, focusing on developing high-end nodes using ASML systems.

Earnings Reports (3/11/2025)

Casey’s General Stores Inc (CASY), Ciena Corp (CIEN), Dick’s Sporting Goods Inc (DKS), Ferguson Enterprises Inc (FERG), Kohl’s Corp (KSS).