Mixed up by tariff news

It was a tough day yesterday for the mega-cap stocks, so by extension, it was a tough day for the stock market. To be fair, it was tougher for the market cap-weighted indices than the equal-weighted indices. The market cap-weighted S&P 500 declined 1.1%, whereas the equal-weighted S&P 500 declined only 0.2%.

There isn’t much conviction in the equity futures market this morning, so things are set up for a lull in the price action across the broader market when the opening bell rings.

Currently, the S&P 500 futures are down eight points and are trading 0.2% below fair value; the Nasdaq 100 futures are down 52 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 19 points and are trading in line with fair value.

Once again, there is a tariff cloud hanging over the market. After yesterday’s close, President Trump announced that there will be a 25% tariff on all imported passenger vehicles starting April 3 and select auto parts starting May 3. These tariffs, he said, will be permanent.

He made some other tariff news, too:

• Reciprocal tariffs on all countries will be announced April 2, but he said they will be very lenient, and people may be pleasantly surprised.
• The president warned Canada and the EU that they will face large-scale tariffs, far larger than currently planned, if they work together on a response that does economic harm to the U.S.
• The president suggested he could possibly cut tariffs on China as an incentive to get a TikTok sale done.
• The president said he anticipates tariffs on lumber and pharmaceuticals.

There is a lot in that mix, and maybe “mix” is the right word. Market participants are mixed up as to how all of this will translate for the global economy and earnings growth; accordingly, their investing conviction is lacking.

There was a spate of “hard data” released this morning that was mixed relative to expectations.

• The third estimate for Q4 GDP was revised up to 2.4% (Briefing.com consensus 2.3%) from 2.3%, aided by an upward revision to government spending. The Q4 GDP Price Deflator was revised down to 2.3% (Briefing.com consensus 2.4%) from 2.4%.
  • The key takeaway from the report is that it shows a nice expansion in activity during the fourth quarter that was underpinned by consumer spending; however, the report’s impact on the market is muted by its dated nature (we’re just days away from being done with the first quarter). 
• Initial jobless claims for the week ending March 22 decreased 1,000 to 224,000 (Briefing.com consensus 225,000). Continuing jobless claims for the week ending March 15 decreased 25,000 to 1.856 million.
  • The key takeaway from the report is that initial jobless claims — a leading indicator — continue to idle at levels consistent with an otherwise solid labor market.
• The Advance International Trade in Goods deficit for February narrowed to $147.9 billion from a downwardly revised $155.6 billion (from -$153.3 billion); Advance Retail Inventories increased 0.1% following an upwardly revised 0.1% increase (from -0.1%) in January; and Advance Wholesale Inventories jumped 0.3% following an upwardly revised 0.8% increase (from 0.7%) in January.
  • The key takeaway from the report is that the goods deficit, while outsized, narrowed on account of exports being $7.0 billion more than January exports and imports being $0.6 billion less than January imports.

The 2-yr note yield is unchanged at 4.01%, and the 10-yr note yield is up three basis points to 4.37%.

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Originally Posted on March 27, 2025 – Mixed up by tariff news