Bloomberg reported on Saturday and The Wall Street Journal confirmed on Sunday that the Trump administration is tapping the brakes on its tariff deployment strategy. Investors, traders and speculators celebrated the news with a risk-on rally.
According to Bloomberg, "President Trump's coming wave of tariffs is poised to be more targeted than the barrage he has occasionally threatened, aides and allies say, a potential relief for markets gripped by anxiety about an all-out tariff war."
In its follow-up report, the WSJ said the administration "is narrowing its approach to tariffs set to take effect on April 2" and is likely to omit specific tariffs on the automobile and semiconductor industries. Plans for reciprocal tariffs will also be more targeted.
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All three major U.S. equity benchmarks gapped up at Monday's opening bell, another risk-on bounce after Friday's bullish reversal.
As E*TRADE from Morgan Stanley Managing Director Chris Larkin notes, that's despite "a cautious economic outlook from the Fed and more indications of a cooling consumer sector."
As Larkin also explains, "It was also relatively free of tariff drama." Larkin says this week "may be just as important to the market's mood as what any of the numbers reveal about economic growth and inflation."
Today, people are buying dips in risk assets – even names like Boeing (BA, +1.5%), with specific problems long in the making.
The troubled aircraft maker was among multiple Dow Jones stocks that rose more than 2% within the first 15 minutes of trading on Monday.
Home Depot (HD, +3.6%) and Amazon.com (AMZN, +3.6%) enjoyed similar moves and sustained them throughout the session.
Financial stocks, including Visa (V, +2.4%) and Goldman Sachs (GS, +2.7%), posted solid gains. So did Wells Fargo (WFC, +2.4%) – a good show on this day for one of five stocks to buy for a Trump presidency.
Meanwhile, beleaguered athleisure icon Nike (NKE, -0.8%) and defensive names from the health care and consumer staples sectors such as Merck (MRK, -0.9%) and Procter & Gamble (PG, -0.6%) suffered for the risk-taking.
At the closing bell, the blue-chip Dow Jones Industrial Average added 1.4% to 42,583, the broad-based S&P 500 Index was up 1.8% to 5,767, and the tech-heavy Nasdaq Composite surged 2.3% to 18,188.
Some kind of semi stock
AI semiconductor maker Nvidia (NVDA, +3.2%) was among the top Dow stocks, and electric vehicle maker Tesla (TSLA, +11.9%) was at the front of the consumer discretionary rally.
But that's where the positive convergence ends. Citing softening automobile and EV trends, Mizuho Americas analyst Vijay Rakesh updated his outlook for analog semiconductor stocks "to the downside."
Rakesh cited the potential impact of tariffs but also emphasized "elevated demand uncertainty." The analyst says industrial inventories are clearing, though his checks indicate demand recovery is still muted. He says "potentially a better" second half of 2025 is on the horizon.
Rakesh tracks analog semiconductor stocks NXP Semiconductors (NXPI, +5.2%), Microchip Technology (MCHP, +2.2%), Texas Instruments (TXN, +3.6%), Wolfspeed (WOLF, +1.6%), ON Semiconductor (ON, +4.3%), Allegro MicroSystems (ALGM, +2.3%) and Synaptics (SYNA, +1.8%).
Services up, manufacturing down
The co-highlights of this week's economic calendar are Personal Consumption Expenditures Index (PCE) data for February and University of Michigan Consumer Sentiment Index survey results for March, both due out on Friday.
With the March Federal Open Market Committee meeting out of the way, we'll hear from seven Fed officials through the end of the week. The next Fed meeting is scheduled for May 6-7.
This morning, S&P Global Market Intelligence reported that the U.S. Services PMI rebounded to 54.3 in March from 51.0 in February and exceeded a consensus forecast of 51.2.
The U.S. Manufacturing PMI declined to 49.8 in March from 52.7 in February. 49.8. It's below the 50.0 level, signaling a marginal "deterioration in business conditions within the goods-producing sector" for the first time since December.
Earnings season alert
The earnings calendar is relatively light this week, featuring insights on the health of the consumer from Dollar Tree (DLTR, +4.5%) and Lululemon Athletica (LULU, +3.8%) on Wednesday and Thursday, respectively.
It's the last full trading week of the first quarter, though, and that means a new reporting season is right around the corner.
So the earnings calendar is going to get heavy, and soon.
According to FactSet analyst John Butters, first-quarter 2025 estimated average year-over-year (YoY) earnings growth for the S&P 500 is 7.1%.
"If 7.1% is the actual growth rate for the quarter," Butters writes, "it will mark the seventh straight quarter of YoY earnings growth reported by the index."
Butters notes that as of December 31, the estimated YoY earnings growth rate for the S&P 500 was 11.6%.
As Butters observes, "All 11 sectors are expected to report lower earnings today … due to downward revisions to earnings-per-share estimates."
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