President Donald Trump’s pause on sweeping global tariffs while keeping the pressure on China was good for a glorious, one-day rally last Wednesday. But, the next two sessions were divided — setting the stage for what could be more volatility this week as investors try to keep up with an ever-evolving tariff picture as well as earnings. For last week, the S & P 500 and the Nasdaq advanced 5.7% and 7.3%, respectively. But zooming out to survey the damage done by Trump’s trade war, the S & P 500 was still down 4.4% for the month through Friday’s close. It’s still early days in April, but this kind of weakness comes after the S & P 500’s 5.75% decline in March, which was the worst monthly performance for the index since December 2022. Putting last week’s market moves into context requires going back to the evening of April 2, when Trump announced what he billed as “reciprocal” tariffs on U.S. trading partners — but which turned out to be way steeper than the market expected. Concern about how the huge levies on nearly all imports would impact inflation and economic growth gripped Wall Street. Economists and CEOs of some of the nation’s biggest financial firms were ramping up their recession odds. Investors were trying to come to terms with a protracted trade war and how to value stocks because, it seemed, that Trump 2.0 no longer seemed to care about the stock market. He used to view it as a barometer of his success as president but not anymore. Since taking office for the second time, he has aggressively upended the status quo — from mass firings of federal workers aimed at downsizing the U.S. government and piling tariffs on top of tariffs. All the while, the market has been going lower and lower. .SPX mountain 2025-04-02 S & P 500 performance since April 2 Then came last Wednesday, when the president blinked and the S & P 500 rocketed 9.5% higher, its third biggest daily percentage gain since World War II. What sparked the rally was Trump announcing that afternoon he would pause tariffs on nearly all imports at 10% during a 90-day moratorium on those bigger, country-specific levies that when into effect just over 12 hours earlier. He said China was excluded and would face a 125% tariff for retaliating, which is effectively 145%, due to the previously imposed fentanyl-related duty. China shot back and increased its tariffs to 125% from 84%. Did Trump capitulate because of the stock market? Perhaps that was part of it. But media reports and market commentary signaled that it was the sharp selling in bonds Wednesday, which inversely sent yields soaring, that tipped the scales. The thought of foreign bondholders like Japan and China dumping Treasurys en masse and the economic chaos that would create was a bridge too far. The 10-year Treasury yield influences a host of consumer loan costs including mortgage rates, which jumped back higher following a respite the previous week. The Wall Street Journal reported Wednesday the president privately acknowledged the tariffs could cause a recession, but he was worried about avoiding a depression. The report said he was troubled by the way the bond market was acting. On Thursday, the market went right back to worrying about a recession because of the harsh China tariffs and the previously announced 25% levies targeting steel and aluminum and autos. Before Wednesday’s reprieve, Trump had already teased that pharmaceutical tariffs were coming. Friday’s market was volatile — but ended higher after the White House signaled that it would indeed like to strike a trade deal with China. Investors got a double-shot of encouraging March inflation news last week but also a possible warning sign ahead. Both the consumer price index on Thursday and the producer price index on Friday came in cooler than expected. Those reports signaled that price pressures in the pipeline before the April trade war and market meltdown were not as bad as economists had predicted. However, on Friday, the University of Michigan’s closely watched consumer sentiment survey did show further declines in April, along with a spike in inflation worries. So, the data-dependent Fed still has a few weeks to read the tea leaves on the economy and tariffs as its next scheduled policy meeting is set for early May. No rate change is expected. Trying to put odds on how many times the Fed might cut rates this year has been a moving target. The CME FedWatch tool , as of Friday, was pricing at least three cuts in 2025. Central bankers cut rates three times at the end of last year. Tariffs In the week ahead, investors will be buckled up and paying close attention to every twist and turn in the tariff story. Some positive news on this front emerged late Friday when the Trump administration issued guidance that exempted smartphones, computers and other tech products from its reciprocal tariffs — a major win for Club name Apple , which makes most of its iPhones in China and therefore was getting harder to defend due to the 145% duty rate facing those products coming into the U.S. On Friday, Jim Cramer expressed concern that Apple was getting “no help” from the White House. As of now, the exemption does not seem to extend to 20% tariffs on Chinese imports implemented earlier this year tied to fentanyl — but certainly, 20% is significantly more manageable than 145%. The coast may not be entirely clear, though, because there are questions on whether phones and other electronics will eventually be subject to the “sectoral” tariffs on semiconductors that Trump has been saying will be announced soon. Confusion on the fate of those products emerged Sunday when Commerce Secretary Howard Lutnick said on ABC’s “This Week” that the exemption was not “permanent.” Lutnick said, “What he’s doing is he’s saying they’re exempt from the reciprocal tariffs, but they’re included in the semiconductor tariffs, which are coming in probably a month or two.” “We did that in autos,” Lutnick said of sector-specific tariffs. “The president is going to do it for pharmaceuticals, and he’s going to do it for semiconductors, and all those products are going to come under semiconductors and they’re going to have a special, focused type of tariff to make sure that those products get reshored.” Earnings There are no major economic reports in the week ahead — though we’ll be keeping an eye on export and import prices Tuesday; retail sales and industrial production Wednesday; and the weekly initial jobless claims and housing starts Thursday. However, earnings will be critical. Even in more normal times, Jim Cramer always preaches that hearing from management teams who provide real-time color on their industries can be more valuable than backward-looking economic data. That becomes even more valuable in the fast-moving environment we are in now. We are curious to see how many companies cut or withdraw full-year guidance because of the ongoing economic uncertainties — JPMorgan CEO Jamie Dimon predicted on his bank’s earnings call Friday that “a lot” of companies will do just that. Also, mark your calendars for Wednesday: Our Monthly Meeting for April will get underway at noon ET. Goldman Sachs and Abbott Laboratories are the two Club names set to report first-quarter results this week as earnings season heats up. Goldman gets us started on Monday morning, and the dominant theme will be CEO David Solomon’s commentary on the dealmaking environment in this world of constantly evolving tariffs. Just as we were seeing signs that initial public offerings (IPOs) and mergers and acquisitions (M & A) were starting to pick up after a slower-than-expected start to 2025, the wave of uncertainty following the initial “reciprocal” tariff announcement put at least a temporary end to that . Solomon talked a lot about positive backlog trends on Goldman’s January earnings call, so how he characterizes that now will be notable. On Friday, investment banking peer Morgan Stanle y indicated its pipeline has not meaningfully changed since the start of the year. GS YTD mountain Goldman Sachs YTD As for Goldman’s actual first-quarter results, it is expected that market volatility was a boon for its trading desks, at least partially offsetting slower capital markets action. Morgan Stanley, for its part, saw great trading performance. That is no doubt a near-term positive for Goldman, but we need more dealmaking for the stock to work longer term. At the very least, the stock’s big drawdown from its February highs reflects lower expectations in the report. “What people want from Goldman is IPOs and they want M & A,” Jim said bluntly on Thursday’s Morning Meeting. For Abbott Labs, we’ll be looking to see a continuation of the momentum in its core business, with a specific focus on its diabetes offerings. That includes sales of continuous glucose monitors, a key source of expansion, which were up 22% annually last year to $6.5 billion. ABT YTD mountain Abbott Laboratories YTD We also expect discussion on its Volt PFA System, used to treat abnormal heart rhythms, after it received regulatory approval in the European Union in late March. Abbott Labs “has multiple new products that are rolling out now or in the early stages of commercialization, including TriClip in the US and Volt in Europe,” analysts at TD Cowen wrote in a note to clients Wednesday. TriClip is a device used to repair a leaky heart valve. “These drivers enhance the core business and make us confident in [Abbott’s] outlook despite the risk posed by macro factors and the ongoing NEC litigation,” analysts wrote. That’s a reference to Abbott Labs facing a retrial in the specialized infant formula case it won in the fall. It has said it plans to appeal that decision. There wasn’t any discussion of the legal battle on the January earnings call, but that could change this time around. Finally, we’ll see whether Abbott Labs expects any negative impact from tariffs. It has a presence in China to the tune of $2.1 billion in sales in 2024, representing about 5% of companywide revenue. The company had to contend with tariffs on China during Trump’s first term, though the magnitude was nothing like we’re seeing now. A few other big earnings reports outside the portfolio that will provide valuable insight into the state of economic play include Bank of America , United Airlines and trucking firm J.B. Hunt on Tuesday; Pittsburgh-based aluminum producer Alcoa and railroad operator CSX on Wednesday; and chipmaking giant Taiwan Semiconductor Manufacturing and credit card issuer American Express on Thursday. As seen in the graphic below, there’s also a host of regional banks set to report, providing a pulse on economic activity in different corners of the country. Week ahead Monday, April 14 Before the bell: Goldman Sachs (GS) , M & T Bank (MTB) After the bell: Pinnacle Financial Partners (PNFP), Skillsoft Corp. (SKIL) Tuesday, April 15 Bureau of Labor Statistics’ import and export price indexes at 8:30 a.m….
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