Market Report for Thursday, April 10, 2025
Yesterday’s orbit decayed as investors reassessed.
Turns out the monster bounce owed more to oversold conditions and short-covering than to any lasting tariff détente. “Lasting” has been struck from the dictionary. The 90-day pause offers a reprieve, but hardly a resolution. Trump’s trade war still poses growth and inflation risks—and stagflation lacks a fan club.
Level Change 4/10/25 (%)
– – – – – – – – – – – – – – –
-2.5 Dow
-4.3 Nasdaq
-4.2 Nasdaq 100
-3.5 S&P 500
-4.1 S&P 400
-4.5 S&P 600
Trade tension with China advanced from smoldering to lightly flambéed. The White House clarified that its tariff rates of 34%, 54%, 104%, and 125% were, in fact, several scrolls up in the Truth Social feed. The newest China tariff rate is 145%. Oh, and the administration is now busy delisting Chinese stocks from US exchanges like a bouncer clearing a bar at closing time.
Outside the trade orbit, the House passed the Senate’s budget framework after some drama between Speaker Johnson and deficit hawks, those bothersome creatures still fretting about national insolvency. The bill cuts taxes and spending, though the former outpaces the latter by a margin wide enough to add another $5.7T to the US government’s already weighty $36T debt pile over the next decade. Hard to imagine why Treasuries aren’t turning heads these days.
The White House says tariffs will plug the gap, but the trade war outcome is as certain as sticking the landing with sawed-off wings. High tariffs could lead to lower imports, and lower imports mean fewer things to tax—an inconvenient detail.
Headline CPI fell 0.1% in March, cooler than consensus, thanks to oil prices falling on recession fears stirred by the trade war. Core CPI rose just 0.1%, also below consensus, of 0.3%. Year-over-year, core slowed to +2.8%, its first time below 3% since April 2021. But it’s not exactly parade-worthy, given that the tariff impact hasn’t shown up yet. Patience; it’s working on it.
Federal Reserve Bank of Dallas President Lorie Logan warned that tariff-induced inflation mustn’t become permanent. Currently, the most effective strategy for ensuring that is to do nothing.
Kansas City Fed President Jeffrey Schmid has detected a whiff of uncertainty, something about a trade war, apparently. Sigh. This complicates the Fed’s job. The spreadsheet has been switched to the stagflation template. And if it comes down to choosing between taming the stag or the ’flation, it’s the latter, every time. Remember the ’70s, folks.
Chicago Fed President Austan Goolsbee expressed surprise at the size of the tariffs, possibly the 145% variety. He endorsed Logan’s elegantly passive strategy of doing nothing, while hazarding that “12 to 18 months from now, rates will be lower than they are today.” With any luck, so will public memory.
So buck up, CarMax (KMX -17%). Sure, you missed earnings. Yes, uncertainty has reached such heroic proportions that you’ve stopped offering guidance altogether. But just close your eyes and imagine lower interest rates in fall 2026. CEO Bill Nash posed the question on everyone’s mind: “Why put a target out there that’s really speculative, not knowing exactly where this environment is going to go?” Why indeed. Clarity is so last administration.
At least one thing remains reliable: higher prices, according to Amazon (AMZN -5.7%) CEO Andy Jassy. He expects his company’s army of third-party sellers to pass tariff costs along to consumers, and frankly, he gets it. “I mean, depending on which country you’re in, you don’t have 50% extra margin that you can play with,” he told CNBC’s Andrew Ross Sorkin. “I think they’ll try and pass the cost on.” Shock factor: zero. Inflation remains in excellent health.
— Jason Kelly
No stagflationary bulls or bears were harmed in the making of this report.
