Stocks Retreat on Continued Global Economic Uncertainty

The S&P 500 Index ($SPX) (SPY) today is down -2.50%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -2.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -2.75%.  June E-mini S&P futures (ESM25) are down -2.24%, and June E-mini Nasdaq futures (NQM25) are down -2.64%. 

Stock indexes today are trading lower, giving back some of Wednesday's sharp rally.  Despite President Trump's action on Wednesday to announce a 90-day pause on reciprocal tariffs to 56 countries, the markets are still concerned about the effects of US trade policies on the global economy as many tariffs remain in place. The tariffs have caused consumer confidence to plummet and have prompted many companies to suspend their capital spending plans, a negative factor for GDP growth.  Also, the US trade war with China has escalated, adding to economic uncertainty.  After China retaliated Wednesday and imposed 84% tariffs on US goods, the US raised tariffs on Chinese goods to 125% from 104%. 

Stock index futures recovered from their worst levels today on signs of slowing inflation after the US March CPI ex-food and energy report rose less than expected and at the slowest rate in 4 years.  Also, the US labor market remains buoyant after the weekly jobless claims report was in line with expectations.

US weekly initial unemployment claims rose +4,000 to 223,000, right on expectations.  Weekly continuing claims fell -43,000 to 1.850 million, showing a stronger labor market than expectations of 1.886 million.

The US Mar CPI report rose +2.4% y/y, weaker than expectations of +2.5% y/y and the smallest increase in 6 months.  The Mar CPI ex-food and energy report rose +2.8% y/y, weaker than expectations of +3.0% y/y and the smallest increase in 4 years.

Signs of deflation in China, the world's second-largest economy, showed weak demand and were negative for global growth prospects.  China March CPI fell -0.1% y/y, weaker than expectations of unchanged y/y.  Also, Mar PPI fell -2.5% y/y, weaker than expectations of -2.3% y/y.

On Wednesday, President Trump announced a 90-day pause on higher reciprocal tariffs on 56 nations but left in place the new 10% baseline tariff on all virtually nations.  Today, the EU said it will delay for 90 days the implementation of 25% tariffs on 21 billion euros worth of US goods sent to Europe.

Stocks have been under pressure over the past month due to fears that US tariffs will weaken economic growth and corporate earnings.  On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  Last Wednesday, President Trump signed a proclamation to implement a 25% tariff on US auto imports.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  Mr. Trump said the tariffs were "permanent," and he was not interested in negotiating any exceptions.  Last Saturday, a 10% baseline tariff for virtually all nations took effect.

The markets are discounting the chances at 21% for a -25 bp rate cut after the May 6-7 FOMC meeting, down from 30% last week.

Market attention this week will focus on US trade policies.  On Friday, the March final-demand PPI is expected to climb to +3.3% y/y from +3.2% y/y in Feb, and the March PPI ex-food and energy is expected to rise to +3.6% y/y from +3.4% y/y in Feb.  Friday’s University of Michigan Apr US consumer sentiment index is expected to fall to 54.0 from 57.0 in March. 

Q1 earnings reporting season will begin on Friday when big US banks report their results.  According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500, down from expectations of +11.1% in early November.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. 

Overseas stock markets today are higher.  The Euro Stoxx 50 is up sharply by +5.53%.  China's Shanghai Composite Index closed up +1.16%. Japan's Nikkei Stock 225 closed up sharply by +9.13%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +16 ticks.  The 10-year T-note yield is down -0.6 bp to 4.326%.  June T-notes today are moderately higher on speculation that Wednesday's action by President Trump to pause reciprocal tariffs will improve confidence in the US and keep foreign investors from dumping dollar assets, including stocks and Treasuries.  Also, today's slower-than-expected increase in US March consumer prices is bullish for T-notes.  In addition, today's stock slump has boosted safe-haven demand for T-notes.  Supply pressures are bearish for T-notes as the Treasury will auction $22 billion of 30-year T-bonds later today to conclude this week's $119 billion T-notes and T-bonds auction package. 

European bond yields today are mixed.  The 10-year German bund yield is up +3.8 bp to 2.629%.  The 10-year UK gilt yield is down -9.6 bp to 4.683%.

Swaps are discounting the chances at 91% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The Magnificent Seven stocks today are under pressure, weighing on the broader market.  Tesla (TSLA) is down more than -62%, and Nvidia (NVDA) is down more than -5%.  Also, Apple (AAPL), Meta Platforms (META), and Amazon.com (AMZN) are down more than -3%.  In addition, Microsoft (MSFT) is down more than -2%, and Alphabet (GOOGL) is down more than -1%. 

Chip makers are sliding today and are pressuring the overall market. As a result, Microchip Technology is down more than -9% to lead losers in the S&P 500 and Nasdaq 100.  Also, ON Semiconductor (ON) and Micron Technology (MU) are down more than -6%, and Advanced Micro Devices (AMD), Marvell Technology (MRVL) and Analog Devices (ADI) are down more than -5%.  In addition, NXP Semiconductors NV (NXPI), Lam Research (LRCX), GlobalFoundries (GFS), KLA Corp (KLAC), Broadcom (AVGO), and Texas Instruments (TXN) are down more than -4%.

Economic concerns are hammering travel and leisure stocks today. United Airlines Holdings (UAL), Norwegian Cruise Line Holdings (NCLH), and Carnival (CCL) are down more than -7%.  Also, Delta Air Lines (DAL), Royal Caribbean Cruises Ltd (RCL), Caesars Entertainment (CZR), and Expedia Group (EXPE) are down more than -5%.  In addition, Las Vegas Sands (LVS), Hilton Worldwide Holdings (HLT), MGM Resorts International (MGM), and Wynn Resorts (WYNN) are down more than -3%. 

Energy producers and energy service providers are falling today with the price of WTI crude down more than -4%.  As a result, APA Corp is down more than -10%, and Devon Energy (DVN) is down more than -7%.  Also, Diamondback Energy (FANG) and Occidental Petroleum (OXY) are down more than -6%, and Valero Energy (VLO) and Phillips 66 (PSX) are down more than -5%.  In addition, Baker Hughes (BKR) and Hess Corp (HES) are down more than -3%.

CarMax (KMX) is down more than -15% to lead losers in the S&P 500 after reporting Q4 EPS of 58 cents, below the consensus of 65 cents.   

US Steel (X) is down more than -8% after President Trump said that while he loves Japan, he doesn't want a Japanese company to own it, dampening the prospects for Nippon Steel to acquire US Steel.

Comcast Corp (CMCSA) is down more than -2% after BNP Paribas Exane downgraded the stock to underperform from neutral with a price target of $31.

Eversource Energy (ES) is down more than -1% after JPMorgan Chase downgraded the stock to underweight from neutral.

Dexcom (DXCM) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100 after winning approval from the FDA for its G7 15-day continuous glucose monitor.

Lovesac Co (LOVE) is up more than +11% after reporting Q4 net sales of $241.5 million, stronger than expectations of $230.3 million.

Keros Therapeutics (KROS) is up more than +16% after it said it is initiating a formal review to evaluate strategic alternatives for the company, including a potential sale.

Enact Holdings (ACT) is up more than +7% after S&P Dow Jones Indices announced that the stock will replace SolarWinds in the S&P SmallCap 600 index before trading begins April 16.

UnitedHealth Group (UNH) is up more than +2% to lead gainers in the Dow Jones Industrials after Argus Research raised its price target on the stock to $620 from $560.

Earnings Reports (4/10/2025)

Bank7 Corp (BSVN), Byrna Technologies Inc (BYRN), CarMax Inc (KMX), Evolv Technologies Holdings In (EVLV), Lovesac Co/The (LOVE), Northern Technologies International (NTIC).