Stocks Waver Friday After Wild Week of Volatility

The S&P 500 Index ($SPX) (SPY) today is up +0.39%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.41%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.54%.  June E-mini S&P futures (ESM25) are up +0.86%, and June E-mini Nasdaq futures (NQM25) are up +1.04%. 

Stock indexes today have wavered between relatively mild gains and losses after a week marked by extreme volatility, both higher and lower. Headlines have provided little in the way of direction, after US consumer sentiment again plunged and price expectations soared.  The University of Michigan US Apr consumer sentiment index fell more than expected to a 2-3/4 year low, and the University of Michigan US Apr 1-year inflation expectations jumped to the highest since 1981 on growing tariff concerns.  Also, US chip manufacturers are slumping today after the China Semiconductor Association said that chip tariffs will be based on where they are manufactured, not where they're shipped from. 

Stocks today initially moved higher on better-than-expected Q1 quarterly earnings results from US banks.  Stock indexes also garnered support today on easing price pressures after US Mar producer prices rose less than expected. 

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. 

The University of Michigan US Apr consumer sentiment index fell -6.2 to a 2-3/4 year low of 50.8, weaker than expectations of 53.5.

The University of Michigan US Apr 1-year inflation expectations jumped to 6.7%, higher than expectations of 5.2% and the highest since 1981.  Also, Apr 5-10 year inflation expectations rose to 4.4%, higher than expectations of 4.3% and the highest since 1991.

Fed comments today were bearish for stocks and bonds.  Minneapolis Fed President Kashkari 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.  Also, St. Louis Fed President Musalem warned of stagflation in the US economy from tariffs, saying there's a near-term risk that inflation will rise while the labor market weakens.

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 28% for a -25 bp rate cut after the May 6-7 FOMC meeting.

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 -1.06%.  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 -1-5/32 points.  The 10-year T-note yield is up +13.2 bp to 4.557%.  June T-notes today tumbled to a 7-week low, and the 10-year T-note yield jumped to a 7-week high of 4.579%.  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.  T-notes extended their losses today after the University of Michigan US Apr 1-year inflation expectations jumped to 6.7%, the highest in 43 years.  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. 

European bond yields today are mixed.  The 10-year German bund yield is down -3.9 bp to 2.541%.  The 10-year UK gilt yield is up +8.2 bp to 4.726%.

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

US chip manufacturers 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 -8% to lead losers in the S&P 500 and Nasdaq 100.  Also, ON Semiconductor (ON) and Intel (INTC) are down more than -6%, and Microchip Technology (MCHP) is down more than -5%.  In addition, Analog Devices (ADI), GlobalFoundries (GFS), KLA Corp (KLAC), and Micron Technology (MU) are down more than -3%, and NXP Semiconductors NV (NXPI), Lam Research (LRCX), and Marvell Technology (MRVL) are down more than -1%.

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 +5% to lead gainers in the Nasdaq 100 after reporting Q1 net sales of $1.96 billion, better than the consensus of $1.95 billion.

Huntington Ingalls Industries (HII) is up more than +4% after Goldman Sachs double-upgraded the stock to buy from sell with a price target of $234.

Wells Fargo & Co (WFC) is down more than -3% 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." 

L3Harris Technologies (LHX) is up more than +1% 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 -2% after reporting vehicle shipments in Q1 fell -9% to 1.2 million units. 

Booz Allen Hamilton Holding (BAH) is down more than -% 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).