The stock market showed some flexibility on Friday, rebounding from an early 1.1% decline to finish the quarterly options expiration day 0.1% higher, after President Trump indicated there would likely be some “flexibility” in his reciprocal tariff plan.<\/p>\n\n\n\n
The rebound didn’t stop there. The indices are coming back for more after the S&P 500 and Nasdaq Composite managed to snap their four-week losing streaks.<\/p>\n\n\n\n
Currently, the S&P 500 futures are up 70 points and are trading 1.2% above fair value, the Nasdaq 100 futures are up 315 points and are trading 1.6% above fair value, and the Dow Jones Industrial Average futures are up 416 points and are trading 1.0% above fair value.<\/p>\n\n\n\n
There isn’t any corporate news driving this move. It is all macro — and specifically all tariffs.<\/p>\n\n\n\n
Market participants are rallying around a Wall Street Journal<\/em> that the April 2 reciprocal tariffs could be narrower in scope with some sectors, like autos, pharmaceuticals, and semiconductors, possibly avoiding special reciprocal duties, and an implication that some countries, which have a trade surplus with the U.S., possibly being exempt. The focus of the reciprocal tariffs, the report suggests, will be roughly 15% of countries with which the U.S. has a persistent trade deficit.<\/p>\n\n\n\n One of the article’s most salient points is that “planning remains fluid.” This much market participants know by now, yet it is the requisite reminder when it comes to tariff policy.<\/p>\n\n\n\n The risk-on switch has been turned on today because the more onerous tariff switch has seemingly been turned off. That can all change at the flip of a switch, but an oversold market looking for an angle to rally has gotten one this morning that is pressuring short sellers. The 2-yr note yield is up five basis points to 4.00% and the 10-yr note yield is up five basis points to 4.30%.<\/p>\n\n\n\n There will be broad-based buying interest at the open that is led by the mega-cap stocks. What participants will be focused on is if there is a switch in the trading tone, whereby the inclination to sell into strength is suppressed in favor of sustaining strong gains.<\/p>\n\n\n\n There is a limited amount of economic data due out today, but the data that is scheduled is “soft” survey data. Nonetheless, the preliminary March S&P Global U.S. Manufacturing PMI (prior 52.7) and preliminary March S&P Global U.S. Services PMI (prior 51.0), which will be released at 9:45 a.m. ET, have the cachet to create some added trading excitement.<\/p>\n\n\n\n —<\/p>\n\n\n\n