Early Look

Monday, April 7, 2025

U.S. futures are solidly in the “red” for a third straight day, but also near their best levels of the overnight session, with S&P futures (Spuz) paring losses to -1.9% at 5,015 (off lows of 4,832) as the CBOE Volatility index (VIX) near overnight lows +5.5% at 47.80 (off highs 60.13). The yield on 10-yr U.S. Treasury notes erases earlier fall, last flat on day at session high of 4.01% (off lows below 3.88%). WTI crude oil posted a third steep decline, dipping below $60 a barrel earlier as another plunge across financial markets was compounded by the Saudi price cut. A scary picture overseas as in Asian markets, The Nikkei Index plunged -2,644 points or 7.83% to 31,136, the Shanghai Index dropped -245 points or 7.34% to 3,096, and the Hang Seng Index tumbled -3,021 points or 13.22% to 19,828. In Europe, the German DAX is down -850 points or 4.1% to 19,792, while the FTSE 100 tumbles -250 points or 3.54% to 7,770. A bleak start to the trading day, but a little promise given the bounce off overnight lows.

The stock market was pounded for a second day Friday after China retaliated with new tariffs on U.S. goods, sparking fears President Donald Trump has ignited a global trade war that will lead to a recession. The Dow on Friday dropped more than -2,200 points, or 5.5%; the S&P 500 and the Nasdaq also each lost nearly -6%. The Dow and S&P 500 slipped further into correction territory Friday. The Nasdaq Composite closed in a bear market (defined as -20% from highs). For the week, the S&P 500 fell -9.08% (biggest weekly decline since March 2020), the Nasdaq declined -10.02%, and the Dow fell -7.86% and The Russell 2000 SmallCap index fell -9.70% all on trade war/tariff fears. The Dow is now down -14.9% from its record close, the S&P 500 has fallen -17.4% from its record close. The Nasdaq has now confirmed a bear market since its December 16 record close with a -22.7% collapse and Russell 2000 over -27%.

Baseline 10% tariffs on all countries went into effect Saturday April 5, but on Wednesday, higher “reciprocal” tariff rates of 11% to 50% on individual countries are due to take effect for countries that have large trade surpluses with the U.S., including China, the European Union, Japan, South Korea, and Taiwan. Thursday is when China’s 34% retaliatory duties on all imported U.S. goods take effect. In some good news, some nations have already signaled a willingness to engage with the U.S. to avoid the duties. Reuters reported Sunday more than 50 nations have reached out to the White House to begin trade talks since U.S. President Donald Trump rolled out sweeping new tariffs, top officials said on Sunday including India, Taiwan, and Israel, joining comments by Vietnam and Cambodia late Friday.

Key events this week include: 1) the global tariff drama continues this week and still dominates market headlines; 2) First-quarter earnings season also kicks into high gear with the big banks reporting their results (JPM, MS, WFC on Friday) along with Delta Air Lines (DAL) on Wednesday. 3) Inflation back in play as Consumer (CPI) and producer (PPI) price inflation data for March will be a key economic focus this week.

Stats of note: 1) Last week, the S&P 500 fell 10% in 2 days last week (Thursday and Friday); that’s only happened 4 times in history: October 1987 (Black Monday), November 2008 (financial crisis), March 2020 (Covid) and April 2025 (tariffs). 2) Shark biotech tweets: “$XBI has had four 3%+ down days in one week; this has never happened before; we have had 3X many times never 4; also 7 of last 9 days have been down over 1%”. Bespoke Invest noted: “Trump tariffs hit Technology and Energy stocks the hardest last week, with the average Energy stock falling 19.7% and the average Tech stock down 14.4% in the two days after Liberation Day (4/2).”

• The Dow Jones Industrial Average fell -2,231.07 points, or 5.50%, to 38,314.86
• The Nasdaq Composite plunged -962.82 points, or 5.82%, to 15,587.89
• The Russell 2000 Index declined -83.51 points, or 4.37% to 1,827.03

• 3:00 PM EST                Consumer Credit for February

• Earnings After the Close: GBX LEVI PLAY

• Taiwan has agreed to drop all tariffs on the U.S.  joining India, Israel, Vietnam, and Cambodia, who also intend to zero out their tariffs. Over *50* countries have called to negotiate with Trump so far. Taiwan’s President Lai Ching-te offered zero tariffs as the basis for talks with the U.S., pledging to remove trade barriers and saying Taiwanese companies will raise their U.S. investments. An Indian government official told Reuters the country does not plan to retaliate against a 26% tariff and said talks were under way over a possible deal – Reuters.
• European Union countries will seek to present a united front in the coming days against U.S. President Donald Trump’s tariffs, likely approving a first set of targeted countermeasures on up to $28 billion of U.S. imports. Such a move would mean the EU joining China and Canada in imposing retaliatory tariffs on the United States in an early escalation of what some fear will become a global trade war. The 27-nation bloc faces 25% import tariffs on steel and aluminium and cars and “reciprocal” tariffs of 20% from Wednesday for most other goods.
• Despite comments from other administration officials that over 50 countries are calling the White House to negotiate, the tariff strategy President Trump announced Wednesday will stay in place, Commerce Secretary Howard Lutnick said on CBS. “There is no postponing,” he said. “They are definitely going to stay in place for days and weeks.” The tariffs will bring back manufacturing jobs and make the U.S. more self-sufficient building critical products like medicine, ships and semiconductors, Lutnick said.
• Goldman makes recession its base case unless Trump cuts tariffs. For the 3rd time in a month, Goldman cuts US GDP forecast (now just 0.5% Q4 YoY), and raises recession probability. Says unless Trump cuts tariffs and the average effective US tariff (of 20%) before April 9, its base case will be a recession.

• Tesla (TSLA) price tgt cut to $315 from $550 at Wedbush (Bull Dan Ives) saying they “remain bullish on Tesla, but this is a critical moment for Musk. The brand is weakening as a political symbol, and the situation is unsustainable. Musk has overcome major challenges before — this may be his toughest yet.”
• VF Corp. (VFC) downgraded to Neutral from Buy at Citigroup citing its estimate decreases and increasing concern about the company’s ability to turn Vans around in the current macro environment.

• Diamondback Energy (FANG) upgraded to Buy from Neutral at Citigroup and raised tgt to $180 from $157 saying the co remains a top-tier E&P company, as reflected in a break-even oil price at just $36 per barrel.
• Howmet Aerospace (HWM), which supplies parts for planes built by Airbus (EADSY) and Boeing (BA) may halt some shipments if they are impacted by tariffs announced by U.S. President Donald Trump, according to a letter seen by Reuters. A force majeure event is a legal practice that allows parties to a contract to avoid their obligations if hit by unavoidable and unpredictable external circumstances. Howmet declined to comment.
• Woodside Energy on Monday said infrastructure investor Stonepeak will invest $5.7 billion in its proposed Louisiana LNG gas-export development in the U.S., an important deal as the Australia-based company prepares for a final decision on the project.

• McKesson (MCK) mentioned positively in Barron’s saying McKesson has consistently grown ahead of the broader market in recent years. The stock’s steady earnings should attract safety-minded investors in the current climate. Margins could edge higher as the company transports more specialty drugs.
• QIAGEN (QGEN) guides Q1 2025 preliminary net sales rise 7% CER and adjusted diluted EPS results of at least $0.55 CER both above outlook despite challenging macro environment; FY25 adj diluted EPS outlook raised to about $2.35 CER (vs. prior outlook about $2.28 CER); said on track to exceed 31% CER adjusted operating income margin ahead of 2028 mid-term target.

• Fox Corp. (FOXA) downgraded to Underperform at Wolfe.
• Newsmax (NMAX) files to sell 121.29M shares of Class B common stock for holders