April 4, 2025
U.S. equity futures are sharply lower in early trading (S&P futures -2.3%, Nasdaq futures -2.6%), following Thursday’s steep selloff that marked the S&P 500’s worst day since 2020. Risk sentiment remains under pressure globally, as markets digest escalating trade tensions and increased policy uncertainty. China announced a 34% tariff on all U.S. imports starting April 10, fueling concerns over a prolonged trade war and its impact on earnings, capital spending, and hiring. Uncertainty around the Trump administration’s tariff strategy—caught between goals of reciprocity, trade rebalancing, and revenue generation—continues to weigh on sentiment. There are also fresh reports that Republicans are considering raising the top tax rate to help fund an extension of the Trump-era tax cuts, adding fiscal ambiguity to the mix. Meanwhile, skepticism is growing over whether reconciliation efforts can meaningfully offset the economic drag. Fed uncertainty also lingers, with investors doubting the central bank will move preemptively given the inflation complications tied to tariffs.
Today’s focus is on the March jobs report, with consensus expecting a 140K gain in nonfarm payrolls, steady unemployment at 4.1%, and average hourly earnings up 0.3% m/m. Fed Chair Jerome Powell speaks at 11:25 ET, followed by Fed Governors Barr and Waller. Powell is expected to reinforce the Fed’s patient stance while acknowledging near-term inflation pressures from tariffs.
Corporate Highlights:
- XOM: 8-K filing flagged potential Q1 EPS upside from stronger upstream performance.
- PSX: Activist Elliott nominated four board members, calling for portfolio simplification, a review of refinery operations, and stronger board oversight.
- FIVN: Said Q1 results are expected to be in line or better than guidance; also announced a workforce reduction.
- GES: Reported a Q4 beat; Q1 and FY25 guidance was mixed. Company nearing a China JV, announced a new $200M buyback, and plans cost-cutting efforts in North America
U.S. equities plummeted Thursday, Dow (3.98%), S&P 500 (4.84%), Nasdaq (5.97%), Russell 2000 (6.59%), in the worst session since 2020 for major indices, as markets digested the full impact of President Trump’s “Liberation Day” reciprocal tariff announcement, which turned out to be broader and more aggressive than anticipated. China and Canada responded with threats of retaliation, adding to a growing sense of global economic instability. The Russell 2000 officially entered bear-market territory, while Treasury yields plunged, driven by a flight to safety and expectations of weakening growth. The 10Y briefly fell to 4%, and the 2Y yield dropped 20 bp. The dollar weakened sharply (DXY -1.6%) and WTI crude tumbled 6.6% amid OPEC+ surprise production hikes and softening demand signals. Gold and Bitcoin also traded lower.
The tariff shock triggered a fresh wave of derisking across risk assets, particularly in high-valuation tech, cyclicals, and trade-exposed sectors. Meanwhile, defensive sectors like staples, utilities, and healthcare fared relatively better. Strategists are now recalibrating macro outlooks, with estimates from BofA and JPMorgan suggesting tariffs could impact S&P 500 EPS by 5–35%, lift core PCE by up to 1.5 percentage points, and significantly dampen consumer real income growth. Economists at UBS and Deutsche Bank warned of both inflation spikes and a potential dollar confidence crisis.
In economic data, ISM Services for March fell to 50.8, below consensus, with new orders and employment components both weakening. Many participants cited tariffs as a driver of cost pressures and operational uncertainty. Jobless claims were mixed: initial claims fell to 219K, but continuing claims hit their highest level since November 2021, suggesting growing signs of labor market strain. Meanwhile, Challenger layoffs surged to their highest monthly level since May 2020, led by DOGE-related federal government reductions. All eyes are now on Friday’s nonfarm payrolls report and Fed Chair Powell’s speech, which will be key in shaping rate expectations amid rising stagflation risks.
Company News by GICS Sector
Consumer Discretionary (–6.45%)
- RH (–40.1%): Big Q4 miss and weak FY25 guide; analysts flagged exposure to tariffs, excess inventory, and elevated leverage as key concerns.
- BBY (–17.8%): Downgraded at Best Buy; cited tariff sensitivity and risk to big-ticket discretionary spending.
- NKE (–14.4%): Under pressure due to high production exposure to Vietnam and China, both affected by tariffs.
Information Technology (–6.86%)
- MSFT: Bloomberg reported additional data center cancellations amid shifting AI spending.
- INTC (+2.1%): Gained on report of preliminary chip JV with TSMC; TSM to take 20% stake in Intel’s foundry ops.
- RXST (–37.9%): Missed on prelim Q1 revs; noted steep drop in procedure volume; cut full-year guide.
- NCNO (–19.7%): Revenue in line but EPS missed; FY guide light, blamed macro and FX headwinds.
- BB (–9.1%): Beat on Q4 but weak guide for Q1 and FY; revenue growth concerns linger.
- AYI (–3.4%): Light on revenue with retail and corporate demand softness; plans pricing adjustments in response to tariffs.
Financials (–5.01%)
- LSTR (–8.8%): Reiterated Q1 revenue midpoint but warned EPS to be hit by insurance costs and a supply chain fraud incident.
- COF / DFS: NYT reported DoJ is expected to approve Capital One’s acquisition of Discover.
Industrials (–5.41%)
- PH (–11.5%): Downgraded at Wolfe; cited macro uncertainty and declining industrial indicators post-tariff.
- MSM (–5.2%): Missed on Q2 sales, flagged extended shutdowns; Q3 revenue guide below consensus.
- LYFT (–11.4%): Downgraded at BofA; highlighted AV competition, weak bookings, and margin risks.
Energy (–7.51%)
- Broadly sold off as OPEC+ announced accelerated production hikes.
- Crude oil fell 6.6%, hit by demand concerns and a risk-off shift across commodity markets.
Health Care (–0.79%)
- CYTK: Analysts positive post-EWTX data seen favoring CYTK’s pipeline.
- DOGE Cuts: Major contributor to surge in Challenger layoffs, with implications for public health staffing and services.
Consumer Staples (+0.69%)
- LW (+10.0%): Big beat on Q3; cited strong volume growth and new customer wins.
- CAG (+1.5%): Missed slightly, but reiterated full-year guide, noted restocking underway.
- HSY: Announced acquisition of LesserEvil for $750M.
Real Estate (–2.98%)
- Sector sold off moderately with broader market, but defensive REITs held up better amid Treasury rally.
Utilities (–0.61%)
- Outperformed in risk-off tape; sector saw defensive flows amid sharp macro downgrades and yield drop.
Materials (–4.19%)
- Commodity-related names pressured by crude drop and broader growth fears.
- Tariff-sensitive names underperforming on stagflation concerns.
Communication Services (–4.77%)
- Media names sold off broadly.
- WBD, META, and DIS all traded lower with TikTok uncertainty and ad market softness cited.
Eco Data Releases | Friday April 4th, 2025
S&P 500 Constituent Earnings Announcements | Friday April 4th, 2025
Data sourced from FactSet Research Systems Inc.
