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Wall Street Gets Tariffied
If misery loves company, the stock market threw a block party today.
Investors capped the week with all the grace of a sneeze in a violin recital, as the S&P 500 notched its second-worst performance of the year and the Nasdaq its fourth. Of the past six weeks, the market faceplanted five.
Level Change 3/28/25 (%)
– – – – – – – – – – – – – – –
-1.7 Dow
-2.7 Nasdaq
-2.6 Nasdaq 100
-2.0 S&P 500
-1.8 S&P 400
-2.1 S&P 600
Tariff and stagflation fears dominated, with all eyes on next week’s April 2 “Liberation Day” announcement of reciprocal tariffs.
The term comes from President Trump’s March 21 post on his social media platform Truth Social: “April 2nd is Liberation Day in America!!! For DECADES we have been ripped off and abused by every nation in the World, both friend and foe. Now it is finally time for the Good Ol’ USA to get some of that MONEY, and RESPECT, BACK.”
EU officials reportedly floated concessions, while Canadian Prime Minister Carney offered a diplomatic cocktail of “positive discussions” and “we will retaliate next week.”
Inflation reasserted itself, with February’s core PCE rising 0.4% month-over-month, warmer than expected and enough to make the Fed sweat through its hawkish feathers. Personal income came in hot at 0.8% (expectations were a modest 0.4%), while consumer spending lagged a touch at 0.4%, suggesting the average American is earning more but hunkering down.
The University of Michigan consumer sentiment survey confirmed this, chiming in with a one-year inflation expectation of 5% — its highest since late 2022, and with a five-year expectation up to 4.1%, a number not seen since George H.W. Bush was checking his watch during debates.
San Francisco Fed President Mary Daly affirmed her belief in two rate cuts this year, pending the small matter of inflation cooling, a prospect she finds not yet decisive, Fedspeak for “not happening.” At least she considers stagflation unlikely.
And so, with weary steps, investors turn toward next week’s gathering front. The Hinrich Foundation, a global trade advocacy group, made the stakes plain:
“April 2 is shaping up to be a turning point in history. The creator of the existing global trading system will be clearly operating outside the trade rules and norms that have governed economic interactions worldwide for almost 80 years. It will, in a matter of days, be seen turning its back on principles of non-discrimination and actual reciprocity in favor of a new scheme that delivers unilateral trade benefits to the United States alone. The consequences for businesses, consumers, and governments will be profound.”
— Jason Kelly
This is a big weekend for The Kelly Letter, when it issues its quarterly signals. Ahead of the turning point in history, join now to position your portfolio for a result that might just surprise Wall Street. Learn how membership pays, at jasonkelly.com.
