Schwab Market Update

Tariff Tantrum: Stocks Dive Ahead of Announcement

April 2, 2025 Alex Coffey
Stocks fell sharply, around 1%, as investors hunkered down awaiting today's 4 p.m. White House tariff announcement. Treasury yields are probing their lowest levels of the year.

Published as of: April 2, 2025, 9:24 a.m. ET

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The markets Last price Change % change
S&P 500® index

5,633.07

+21.22

+0.38%

Dow Jones Industrial Average®

41,989.96

-11.80

-0.03%

Nasdaq Composite®

17,449.89

+150.60

+0.87%

10-year Treasury yield

4.13%

-0.20

--
U.S. Dollar Index

104.10

0.16

-0.15%

Cboe Volatility Index® 23.23
+1.48

+6.80%

WTI Crude Oil

$70.85

-$0.36

-0.51%

Bitcoin

$84,720.84

-$270.92

-0.32%

(Wednesday market open) As tariff "Liberation Day" dawns on Wall Street, stocks slumped 1% in U.S. pre-market trading, and investors continued to bid up perceived "safety" plays like bonds and gold. The White House announcement¬—now set for 4 p.m. ET—could answer questions on how high tariffs might be, which countries they'll affect, whether they'll be universal or different for each country, and how much time there might be to negotiate. While having a few answers might bring some relief to a shaky market, lots will likely stay unclear, and equity volatility is rising.

"Treasury Secretary Scott Bessent said last week that the tariffs would focus on 15 countries with which the U.S. has large trade imbalances and that they would be a unique number designed to equalize the tariffs and non-tariff barriers placed on the U.S. by each country," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab, in his latest look at what's known about the possible tariff picture. "But over the weekend, there were multiple reports that the White House was still considering across-the-board 20% tariffs on all imports, which is reminiscent of Trump's rhetoric from the campaign trail in 2024. On Sunday night, Trump said 'essentially all' countries would be hit with some sort of tariff later this week."

In non-trade news, investors got a fresh look at the jobs picture early today with ADP's private sector report for March. The data came in above expectations at 155,000 and included gains in manufacturing, but that doesn't necessarily mean much for Friday's government numbers. Analysts see job gains of 130,000, down from 151,000 in February, with unemployment staying at 4.1%. Trade uncertainty makes it hard to predict hiring trends. "Companies can't plan if they aren't sure whether tariffs imposed today will be modified or delayed next week or next month," Townsend said. "How can a business decide whether to upgrade equipment or hire a new employee if they don't know what the demand for their products will be in the months ahead?"

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Three things to watch

1. Tesla deliveries weaken: If an all-out trade war ensues, there might be a lot more weakness to come. And a company at the heart of all this, arguably, is Tesla (TSLA). Quarterly deliveries from the EV maker were under scrutiny today after coming in at 336,000, well below the 380,000 expected. Shares slipped 4% on the news in pre-market trading. Tesla has said it could see business hurt by tariffs. It's far from alone. Other auto makers, home builders, pharmaceutical companies, and energy firms may all wind up paying more for materials due to the new tariff regime. It's unclear how much of the new costs these and other firms will pass along to consumers and businesses, but price hikes could hurt progress against inflation. On the other hand, if companies eat the new costs, they'll face profit pressures, and analysts have steadily dropped their expectations for S&P 500 earnings growth in 2025. This, along with tariff uncertainty, has been eating into stock prices.

2. Sector shift: While a prolonged, bitter trade war could send the global economy into recession and offer little hiding place for investors, the U.S. sectors performing best over the last month include energy, utilities, and staples, suggesting a trend toward areas seen as slightly less vulnerable to trade volatility. The recent rise in Treasuries and gold hint that some investors are shifting out of stocks entirely For anyone wondering how possible tariff scenarios might play out across the economy and various product categories, there are online models that let you choose countries and tariff levels to estimate the potential impact.

3. Data docket: Yesterday's mostly sour numbers signaled that so-called "hard" data is starting to reflect the weakness in "soft data" like confidence seen over the last month. February Job Openings and Labor Turnover Survey (JOLTS) dropped nearly 200,000 to 7.568 million. Job openings in the retail trade category fell more than 100,000, possibly reflecting worries over consumer spending. ISM Manufacturing PMI, also released yesterday, slipped below the 50 level—a level that signals expansion—to 49, missing the average analyst estimate of 49.8 and showing sharp drops in factory activity and other categories. Meanwhile, the report's prices paid component hit new highs. "This report will likely keep 'stagflation' in the headlines given that the activity readings components are generally in contraction territory while the prices paid index rose to its highest level since mid-2022," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. Martin said JOLTs suggests a "cooling but not crumbling" labor market. 

On the move

- Ford (F) and General Motors (GM) were both down less than 1% early Wednesday after Ford fell nearly 2% yesterday. Ford reported a 1.3% drop in first quarter U.S. vehicle sales from a year earlier, while GM's U.S. sales rose 17% in the first quarter.

- Newsmax (NMAX), which went public Monday, was down 19% ahead of the open after rising 179% in its second day of trading Tuesday.

- CoreWeave (CRWV), the AI company that went public last week, fell more than 4% in pre-market trading as volatility continued.

- Microsoft (MSFT), which forged its lowest price of the last year in Monday's session, came under more pressure this morning as Xbox competitor Nintendo announced details of its Switch 2 gaming console, a bigger and more powerful version. Bloomberg said analysts expect runaway sales.

- Airline stocks fell almost across the board in pre-market trading Wednesday after a 6.8% drop in Southwest (LUV) yesterday following a downgrade by analysts at Jefferies, citing weaker summer demand. The analysts also downgraded American Airlines (AAL) and Delta Air Lines (DAL). Delta reports next week. With some travelers planning to boycott the U.S. over tariffs, airlines may be in the spotlight as an early read on the impact of a possible trade war.

- Walmart (WMT) fell 0.5% early Wednesday as Bloomberg reported that the U.S. retailer is pressuring its suppliers in China to lower prices amid new tariffs.

- Coinbase Global (COIN) and MicroStrategy (MSTR) both fell as Bitcoin (/BTC) lost ground in what appears to be a "risk-off" trading environment.

- The Atlanta Fed's GDPNow model now forecasts a 1.4% drop in first quarter U.S. gross domestic product (GDP), after adjusting for gold imports.

- Crude oil (/CL) fell 0.5% early Wednesday. One thing to watch is whether Trump decides to resume postponed tariffs on Canadian and Mexican energy today.

- The U.S. 10-year Treasury yield (TNX) edged toward its 2025 intraday low below 4.13% early today and is down sharply from highs above 4.3% as recently as late last week. Investors appear to be flocking into fixed income ahead of the tariff announcement, perhaps perceiving more safety in bonds.

More insights from Schwab

Tariff cheat sheet: Schwab's latest Washington: What to Watch Now column explains what we know now about tariff policies ahead of today's big announcement. "Expect market volatility no matter what the final decision is, as companies are growing frustrated with the uncertainty and the inability to plan," Schwab's Townsend writes.

Tariff cheat sheet: Schwab's latest Washington: What to Watch Now column explains what we know now about tariff policies ahead of today's big announcement. "Expect market volatility no matter what the final decision is, as companies are growing frustrated with the uncertainty and the inability to plan," Schwab's Townsend writes.

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Tariff cheat sheet: Schwab's latest Washington: What to Watch Now column explains what we know now about tariff policies ahead of today's big announcement. "Expect market volatility no matter what the final decision is, as companies are growing frustrated with the uncertainty and the inability to plan," Schwab's Townsend writes.

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Tariff cheat sheet: Schwab's latest Washington: What to Watch Now column explains what we know now about tariff policies ahead of today's big announcement. "Expect market volatility no matter what the final decision is, as companies are growing frustrated with the uncertainty and the inability to plan," Schwab's Townsend writes.

Chart of the day

Gold has risen to record highs above $3,150 per ounce, up from the Nov. low below $2,600. Meanwhile, the dollar index is down this year but relatively steady over the last month near 104. That's below its peak above 109 early this year but up from last October's lows near 101.

Data sources: ICE, CME. Chart source: thinkorswim® platform.

Past performance is no guarantee of future results.
For illustrative purposes only.

Gold (/GC-candlesticks) roared to record highs this week and is up sharply from last fall's lows as geopolitical uncertainty partly related to Trump's tariffs had investors piling into the yellow metal. The dollar ($DXY-purple line), which often moves opposite ways from gold, is down from last fall's peak but holding its own over the last month around 104. While soft U.S. data has weighed on the dollar, it hasn't been a washout and the currency remains well above last fall's lows.

The week ahead

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

April 3: ISM Services and earnings from Conagra (CAG), Acuity Brands (AYI), and Lamb Weston (LW). 
April 4: March nonfarm payrolls, unemployment.
April 7: No major earnings or data.
April 8: No major earnings or data.
April 9: FOMC minutes, earnings from Delta (DAL) and Constellation Brands (STZ).
 

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