April 3, 2025
Futures are sharply lower this morning, with the S&P 500 down 3.4% and Nasdaq off 3.8%, following a global risk-off move triggered by Trump’s harsher-than-expected tariff announcement. The rollout of reciprocal tariffs, which included higher-than-anticipated rates and few immediate exemptions, has stoked fears of retaliation, dampened hopes for negotiated relief, and escalated stagflation concerns. These developments pose a challenge for the Fed’s rate-cut outlook, especially amid already elevated inflation signals and lingering policy uncertainty.
Market volatility is expected to remain high, with scrutiny building around the credibility of USTR’s tariff calculations and the Trump 2.0 policy framework more broadly. The move compounds a risk-off trend already underway as investors reprice elevated valuations and the potential impact on 2025 earnings estimates. The broader market, which had rallied into Wednesday’s announcement, now faces renewed pressure as participants reassess the policy and growth outlook.
Key macro data this morning includes the February trade balance, weekly jobless claims, and the ISM Services Index for March (expected to tick down to 53.0 from 53.5). These follow a weaker-than-expected ISM Manufacturing print earlier in the week that also flagged tariff-related pressure on input prices and demand. Fed Vice Chair Jefferson (12:30 ET) and Governor Kugler (14:30 ET) are scheduled to speak today, with markets heavily focused on Fed Chair Powell’s remarks Friday (11:25 ET) following the release of March nonfarm payrolls (~140K expected).
Corporate Highlights:
- RH (RH): Down sharply premarket after a weak Q4 and below-consensus FY25 guidance; cited elevated inventory, tariff exposure, negative free cash flow, and high leverage.
- Franklin Covey (FC): Lowered FY25 revenue and EBITDA guidance, citing economic uncertainty and a challenging business environment.
- Landstar System (LSTR): Narrowed Q1 revenue to midpoint of prior range; EPS reduced due to higher insurance and claims costs.
- Ford (F): Reportedly preparing to offer discounts across multiple models to help offset tariff-related demand pressures.
- Microsoft (MSFT): Bloomberg reports more canceled data center projects in the U.S. and Europe amid changing AI capex trends.
- PACCAR (PCAR): President and CFO Harrie Schippers will retire in early June.
- ConAgra (CAG), Lamb Weston (LW), MSC Industrial (MSM): All set to report earnings this morning.
U.S. equities finished higher Wednesday (Dow +0.56%, S&P 500 +0.67%, Nasdaq +0.87%, Russell 2000 +1.65%), with retail and apparel leading gains amid growing hopes for more nuanced tariffs. Financials, autos, and travel also outperformed, while defensives like staples, telecom, and insurance lagged. The market largely traded in anticipation of Trump’s reciprocal tariff announcement, expected after the close, with reports suggesting a tiered approach (10%, 15%, 20%) by country and sector—helping ease fears of a flat 20% universal rate.
On the data front, March ADP private payrolls surprised to the upside at +155K (vs. +123K consensus), supporting the “hard data” outperformance narrative. Wage growth for job-stayers and changers moderated slightly. February factory orders also beat expectations. However, policy uncertainty remains elevated, especially around trade and fiscal spending. The focus now shifts to Friday’s March Nonfarm Payrolls report and Fed Chair Powell’s post-tariff, post-NFP remarks.
Company News by GICS Sector:
Consumer Discretionary (+2.02%)
- TSLA (+5.3%): Q1 deliveries missed estimates at 336,681 vs 378K consensus, down 13% YoY. Recovered after reports Trump said Musk will step back from Washington duties.
- AMZN (+2.0%): NYT reported last-minute bid for TikTok’s U.S. ops; parties not yet seriously engaging.
- WOOF (+12.8%): CEO purchased 1.6M shares, boosting market confidence.
- SMG (+5.8%): Upgraded to Buy at Truist, citing spring rebound potential and undervalued winter weakness.
- RIVN (-6.0%): Q1 production beat, but stock fell on muted delivery growth and valuation concerns.
Industrials (+0.93%)
- SPWH: Continued strength on Q4 beat and FY26 guidance; market share gains cited.
- FCN (-1.7%): Downgraded at Truist over staffing risks and lower M&A activity under Trump policies.
Financials (+0.90%)
- RKT (+10.0%): Upgraded to Buy at Deutsche Bank; seen benefiting from accretive COOP acquisition.
- NCNO (-19.7%): Earnings miss, guidance light; flagged FX headwinds and derisking efforts. Bookings trends remained solid.
Health Care (+0.63%)
- LLY (flat): Clarified it has no affiliation with HIMS amid confusion around Zepbound distribution.
- CYTK (+7.3%): Gained on peer EWTX trial data seen validating CYTK’s aficamten candidate.
- EWTX (-22.9%): Plunged after reports of serious adverse events in EDG-7500 trial.
- HIMS (+5.1%): Continued momentum after announcing plans to sell Zepbound via telehealth.
- JNJ (flat): Pressured earlier in the week after court rejected third talc-related bankruptcy attempt.
Information Technology (+0.56%)
- BB (-9.1%): Q4 beat, but weak FY revenue guidance and mixed outlook led to profit-taking.
- QCOM (flat): Reportedly evaluating bid for U.K.-based AWE.LN.
- PRGS (+12.1%): Beat on Q1 EPS and revenue, raised FY25 guidance; praised for ShareFile integration and expense control.
Communication Services (-0.14%)
- META (flat): Subsidiary TKO’s UFC signed multiyear partnership.
- RBLX (flat): Launched “rewarded ads” platform to boost engagement; also partnering with Google.
- TKO (+3.7%): Boosted by UFC-META partnership news.
Consumer Staples (-0.18%)
- KDP (+2.2%): Upgraded to Overweight at Morgan Stanley; seen as a “safe haven” amid volatility, benefiting from share gains in U.S. refreshment category.
Energy (+0.07%)
- OPEC+: Meeting Thursday; expected to stick to planned output hikes. Bloomberg also reported production fell in March due to curbs in Iraq and Nigeria, supporting prices.
- WTI crude: +0.7%
- Gold: +0.6%, extending record highs
Real Estate (+0.47%)
- Luxury property in Manhattan posted strongest Q1 in six years, according to CNBC.
Utilities (+0.44%)
- No major corporate headlines. Sector traded as a modest defensive amid macro uncertainty
Eco Data Releases | Thursday April 3rd, 2025
S&P 500 Constituent Earnings Announcements | Thursday April 3rd, 2025
Data sourced from FactSet Research Systems Inc.
