Stocks Wobble After Wild Week of Tariff Swings

The S&P 500 Index ($SPX) (SPY) today is down -0.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.07%.  June E-mini S&P futures (ESM25) are up +0.17%, and June E-mini Nasdaq futures (NQM25) are up +0.21%. 

Stock indexes today are little changed, and have wavered between modest gains and slim declines after a week defined by violent headline-driven price swings. Early gains were led by strength in bank stocks on better-than-expected Q1 quarterly earnings results.  Stock indexes also garnered support today on easing price pressures after US March producer prices rose less than expected.  However, weakness in US chip manufacturers is limiting gains in the overall market after the China Semiconductor Association said that chip tariffs will be based on where they are manufactured, not where they’re shipped from. 

US Mar PPI final demand unexpectedly eased to +2.7% y/y from +3.2% y/y in Feb, better than expectations of an increase to +3.3% y/y and the slowest pace of increase in 6 months.  Also, Mar PPI ex-food and energy unexpectedly eased to +3.3% y/y from +3.6% y/y in Feb, better than expectations of an increase to +3.6% y/y. 

Hawkish comments from Minneapolis Fed President Kashkari were bearish for stocks and bonds when he reiterated today that the potential inflationary impact of tariffs makes the Fed less likely to lower interest rates, even in the face of a weakening economy.

Escalation of the US-China trade war is bearish for stocks after China today raised tariffs on all US goods to 125% from 84% in retaliation for the US raising tariffs on Chinese goods to 145%.  China’s Ministry of Finance also warned that China plans to “resolutely counterattack and fight to the end” if the US continues to infringe on its rights and interests.

The US tariff turmoil is hammering the dollar and boosting gold. The dollar index today sank to a 3-year low and gold prices soared to an all-time high.  The markets are concerned about the effects of US trade policies that 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 dollar is facing a confidence crisis as the US renegotiates its relationships with its trading partners, diminishing its reserve-currency status and prompting some foreign investors to liquidate their dollar assets. 

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 virtually all nations.  Meanwhile, the EU Thursday 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 30% 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 University of Michigan Apr US consumer sentiment index is expected to fall to 53.5 from 57.0 in March. 

Q1 earnings reporting season will begin today 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 mixed.  The Euro Stoxx 50 is down -0.36%.  China’s Shanghai Composite Index climbed to a 1-week high and closed up +0.45%.  Japan’s Nikkei Stock 225 closed down -2.96%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -18 ticks.  The 10-year T-note yield is up +6.3 bp to 4.488%.  June T-notes today tumbled to a 1-1/2 month low and are moderately lower.  Hawkish comments today from Minneapolis Fed President Kashkari weighed on T-notes when he said that the potential inflationary impact of tariffs makes the Fed less likely to lower interest rates.  Also, the ongoing tariff turmoil has fueled a selloff in the dollar to a 3-year low today, raising concern that some foreign investors may dump dollars, stocks, and Treasury securities.  Losses in T-notes are limited today after US Mar producer prices unexpectedly eased, a dovish factor for Fed policy. 

European bond yields today are mixed.  The 10-year German bund yield is down -8.7 bp to 2.493%.  The 10-year UK gilt yield is up +6.1 bp to 4.705%.

UK Feb manufacturing production rose +2.2% m/m, stronger than expectations of +0.2% m/m and the biggest increase in 20 months.

Swaps are discounting the chances at 95% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

The Magnificent Seven stocks are mostly higher and are providing support to the broader market.  Nvidia (NVDA) and Alphabet (GOOGL) are up more than +2%.  Also, Apple (AAPL) and Microsoft (MSFT) are up more than +1%.  In addition,  Amazon.com (AMZN) is up +0.24%. 

US Chip makers are sinking today and weighing on the overall market after the China Semiconductor Association said that chip tariffs will be based on where they are manufactured, not where they’re shipped from. As a result, Texas Instruments (TXN) is down more than -9% to lead losers in the S&P 500 and Nasdaq 100.  Also, Microchip Technology (MCHP) and Intel (INTC) are down more than -7%, and ON Semiconductor (ON) and Analog Devices (ADI) are down more than -4%.  In addition, GlobalFoundries (GFS), KLA Corp (KLAC), Micron Technology (MU), and NXP Semiconductors NV (NXPI) are down more than -2%.

Gold mining stocks are climbing today after the price of gold rallied to a new all-time high.  As a result, AngloGold Ashanti Plc (AU) is up more than +9%, and Newmont (NEM) is up more than +6% to lead gainers in the S&P 500. 

JPMorgan Chase (JPM) is up more than +2% to lead gainers in the Dow Jones Industrials after reporting Q1 adjusted revenue of $46.01 billion, stronger than the consensus of $44.39 billion.

Fastenal (FAST) is up more than +3% after reporting Q1 net sales of $1.96 billion, better than the consensus of $1.95 billion.

Morgan Stanley (MS) is up more than +1% after reporting Q1 net revenue of $17.7 billion, better than the consensus of $16.56 billion.

Wells Fargo & Co (WFC) is down more than -2% after reporting Q1 net interest income of $11.50 billion, weaker than the consensus of $11.81 billion.  

Bank of New York Mellon (BK) is down more than -2% despite reporting better-than-expected Q1 profit after CEO Vince said “the operating environment is becoming more uncertain.” 

Casey’s General Stores (CASY) is up more than +1% after KeyBanc Capital Markets initiated coverage on the stock with a recommendation of overweight and a price target of $500.

L3Harris Technologies (LHX) is up more than +2% after Goldman Sachs double-upgraded the stock to buy from sell with a price target of $263.

Cinemark Holdings (CNK) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $34. 

Stellantis NV (STLA) is down more than -3% after reporting vehicle shipments in Q1 fell -9% to 1.2 million units. 

Booz Allen Hamilton Holding (BAH) is down more than -3% after Goldman Sachs downgraded the stock to neutral from buy.

Earnings Reports (4/11/2025)

Bank of New York Mellon Corp (BK), Blackrock Inc (BLK), Fastenal Co (FAST), JPMorgan Chase & Co (JPM), Morgan Stanley (MS), and Wells Fargo & Co (WFC).