Whistling Past a Haunted Spreadsheet
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Stocks ended mostly higher today, though not in any inspiring fashion — more like the way a snake clears a hurdle. The market slithered around UNCH until lifting its head just above it by the close.
Level Change 4/1/25 (%)
– – – – – – – – – – – – – – –
-0.0 Dow
+0.9 Nasdaq
+0.8 Nasdaq 100
+0.4 S&P 500
+0.6 S&P 400
+0.2 S&P 600
But this week, that counts as a victory. Despite worries about 20% universal tariffs wafting out of the White House tomorrow, and despite stagflation concerns, stocks staged a rally from yesterday morning to today’s close. Megatech was particularly impressive today, with Tesla (TSLA) surging 3.6% and Microsoft (MSFT) tacking on 1.8%. In this market, those are practically standing ovations.
All this, despite stagflation getting an underline in bearish cheat sheets.
ISM manufacturing contracted in March after two months of growth, down to 49.0 from 50.3 in February. Anything under 50 looks like a cotton shirt in a hot dryer: shrinkage.
The survey offered up a gloom bouquet with notes of despair and a metallic tariff aftertaste: manufacturers, it seems, dislike trade wars. They see “no evidence of growing demand” and say “tariff impacts and mitigation strategies are a daily conversation.” No wonder the “business condition is deteriorating at a fast pace” — econospeak for “the wheels are coming off.” With activity slowing and prices rising, the Fed may have to choose between raising rates and squashing what’s left of morale, or standing pat as inflation fires up a coast-to-coast slow roast.
Then why the positive stock market heading into tomorrow’s tariff laceration — er, liberation — day?
It’s possible sentiment got a little too doomsday-ish, setting the stage for a relief bounce. If tomorrow brings more choreographed brinkmanship and mitigation strategies rather than a trade-policy dustbowl, it might just work out.
Don’t get too comfortable, though. That’s the word from Richmond Fed President Tom Barkin, this week’s designated buzzkill. In a speech today, he said uncertainty is leaving some businesses “frozen” or “paralyzed,” and pointed out that the bond market is pricing in more recession risk. This came after his comment yesterday that he’s in no hurry to cut interest rates. He’d rather squash morale than stoke the roast.
— Jason Kelly
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