Stocks Purr, Tariffs Roar
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Stocks crept higher today, looking like a housecat cautiously emerging after the vacuum cleaner has been stowed. Three straight intraday rebounds nearly erased Friday’s 2% S&P spanking.
Level Change 4/2/25 (%)
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+0.6 Dow
+0.9 Nasdaq
+0.8 Nasdaq 100
+0.7 S&P 500
+1.6 S&P 400
+1.5 S&P 600
Today was mostly a waiting game ahead of President Trump’s “liberation day” tariff announcement after the bell, the market hoping he wouldn’t deliver another populist piñata swing. Sky News floated the idea of a tiered approach: tariffs at 10%, 15%, and 20%, parceled out by country and industry like party favors no one wants.
Traders found solace in the forecast not being a flat 20% for all, like cheering that the flood only reached the first floor. Hope for a patchwork plan did little to reduce the haze surrounding Trump 2.0, prompting more talk of selling strength, or what passes for strength in a three-day shuffle vaguely resembling an ascent.
After hours, among the fragrant blooms of the Rose Garden, came thunder and tariffs.
Trump signed an executive order imposing 10% levies on all trading partners, and double-digit “reciprocal” ones on dozens of other countries deemed dastardly or insufficiently deferential. The tallies read like a parody of a customs invoice: 20% on the European Union, 24% on Japan, and 26% on India. All told, more than 100 trading partners found themselves newly baptized in the gospel of economic retribution.
And they’d better get used to it. The administration said it’s in no mood to haggle, with Trump calling the move “kind” because it charges only half as much as it should. “We’re going to start being smart,” he said, “and we’re going to start being very wealthy again.”
To inaugurate the return to riches, S&P 500 futures slid 2%, erasing the three-day rebound that erased Friday’s sell-off. Chatter is simple: here come the countermeasures, and Trump’s economic plan really is a trade war, while China sprints ahead on AI and other fields that couldn’t care less about customs declarations. Our mandarin man says, “you slap tariffs, we write code.”
At least the hard vs. soft data outperformance persists.
March ADP private payrolls rose 155,000, well above the 120,000 consensus and up sharply from February’s upwardly revised 84,000. Wage growth rose 4.6% for those loyal enough to stay put, and 6.5% for those brazen enough to jump ship, both slightly cooler month-on-month. Manufacturing was stronger than average, but construction slowed. Investors squinted at these tea leaves, trying to divine what Friday’s official employment report might hold.
ADP chief economist Nela Richardson dotted the “i” in dichotomy: “Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors.”
After the close, Federal Reserve Governor Adriana Kugler said progress toward the 2% inflation target has slowed down or possibly stalled altogether. She must have wandered through the Rose Garden en route to Princeton, where her words in academic mist emphasized the role of inflation expectations — bad, given “upside risks associated with announced and prospective policy changes.” She probably didn’t mean the renaming of that gulf off America’s southern coast.
Walmart (WMT +1.1%) has been trying to weather the tariff typhoon by pressuring Chinese suppliers to take one for the trading team. It negotiated so aggressively for lower prices last month it ruffled the robes of Beijing’s mandarins, but that didn’t slow it down. In business, margins trump diplomacy. The risk of losing access to US consumers has some Chinese factory owners scouting other locations in Asia, to which Beijing thugs undoubtedly hissed, “Oh, we’ll show you other locations in Asia” — the kind where production stops permanently, along with everything else.
Then there’s Tesla (TSLA +5.3%), whose board must be quietly Googling “CEO succession protocol” as their CEO’s political activities crush sales. First-quarter deliveries of 337,000 came in well below the 378,000 consensus, which prompted the following little dispatch from Politico: Elon Musk will soon be stepping back from his extracurricular role as Washington hatchet man. Apparently, he and Trump have mutually agreed that “it will soon be time for Musk to return to his businesses.” You don’t say.
— Jason Kelly
Psst: The market’s always this topsy-turvy. Stop trying to guess what comes next. Start reacting to what’s already happened. Learn how at jasonkelly.com.
