The stock market put together a relief rally yesterday that drove the S&P 500 back above its 200-day moving average. That was an encouraging technical development that got catalyzed by the notion that there could be some reciprocal tariff relief come April 2.
That remains a leading, if not cloudy, thought today as President Trump also said yesterday that auto and pharmaceutical tariffs will be announced in the near future, that tariffs for lumber and semiconductors would be announced “down the road,” and that he may give a lot of countries breaks on reciprocal tariffs, according to CNBC.
Altogether it is sounding better than feared for the market, which was pining for an excuse to rally from an oversold condition. Sure enough, the mega-cap stocks and small-cap stocks, which were among the hardest-hit stocks in the recent correction, led yesterday’s charge that was accented by risk-on trading behavior.
Growth outperformed value; high-beta stocks outperformed low volatility stocks; and Treasuries succumbed to selling interest.
There is a bid this morning to keep the rally going despite disappointing earnings results and guidance from homebuilder KB Home (KBH) and an FT report that Tesla’s (TSLA) sales in Europe were down 40% year-over-year in February. TSLA is indicated 1.8% higher in pre-market trading.
Currently, the S&P 500 futures are up 17 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 54 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 94 points and are trading 0.2% above fair value.
The 2-yr note yield is up one basis point to 4.04% ahead of today’s $69 billion 2-yr note auction (results at 1:00 p.m. ET), and the 10-yr note yield is up two basis points to 4.35%.
The question on the market’s mind is this: will these moves be sustained or will there be selling into strength (in the case of equities) and buying into weakness (in the case of Treasuries)?
Today’s economic data may hold the answer. The January FHFA Housing Price Index and January S&P Case-Shiller Home Price Index reports will be released at 9:00 a.m. ET, but it is the February New Home Sales Report (Briefing.com consensus 680,000; prior 657,000) and March Consumer Confidence Index (Briefing.com consensus 94.2; prior 98.3) at 10:00 a.m. ET that will do the real driving for traders.
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Originally Posted March 25, 2025 – Tariff relief bid intact ahead of economic data
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