Stocks are tumbling in after-hours trading after President Trump unveiled details of his “Liberation Day” tariff plans. The Invesco QQQ Trust (QQQ) is down -3.44% after ending the regular session up +0.73%, while the SPDR S&P 500 ETF (SPY) has plunged -2.45%, more than erasing its Wednesday gain of +0.63%.

The White House said that baseline tariffs of 10% will go into effect as of April 5, with higher rates set to go into effect April 9. The tariffs came in higher than expected, with China among those hardest hit; the total tariff rate is now at 54% on Chinese imports.

Earlier, the S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.56%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.75%.  June E-mini S&P futures (ESM25) were up +0.69%, and June E-mini Nasdaq futures (NQM25) were up +0.77%. 

Stock indexes recovered from early losses and moved higher on Wednesday as better-than-expected US economic news sparked short covering in equities.  The US labor market showed hiring picked up last month after the Mar ADP employment change rose +155,000, stronger than expectations of +120,000.  Also, Feb factory orders rose +0.6% m/m, stronger than expectations of +0.5% m/m. 

Some strength in megacap technology stocks also supported gains in the broader market Wednesday as Tesla jumped more than +5% after Politico reported that Elon Musk would soon step back from his work for the Trump administration and focus on his businesses in the coming weeks.  Also, Amzaon.com rose +2% after the New York Times reported that the company made an offer to buy TikTok in the US. On Wednesday, stocks initially opened lower as the markets awaited President Trump’s tariff announcement. 

US MBA mortgage applications fell -1.6% in the week ended March 28, with the purchase mortgage sub-index up +1.5% and the refinancing mortgage sub-index down -5.6%.  The average 30-year fixed rate mortgage fell -1 bp to 6.70% from 6.71% in the prior week.

Stocks have been under pressure over the past month due to fears that US tariffs will weaken economic growth and corporate earnings.  On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  On March 8, Mr. Trump reiterated that he would impose reciprocal tariffs and additional sector-specific tariffs on foreign nations on April 2.  Last Wednesday, President Trump signed a proclamation to implement a 25% tariff on US auto imports, effective April 3.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  Mr. Trump said the tariffs were “permanent,” and he was not interested in negotiating any exceptions.

Thursday’s March ISM services index (expected to fall -0.5 to 53.0), and on Friday March nonfarm payrolls are expected to increase by +138,000, and the March unemployment rate is expected unchanged at 4.1%.  Also, March average hourly earnings are expected +0.3% m/m and +4.0% y/y, unchanged from February.  Finally, on Friday, Fed Chair Powell is scheduled to speak to the Society for Advancing Business Editing and Writing Conference on the economic outlook.

The markets are discounting the chances at 16% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Overseas stock markets on Wednesday settled mixed.  The Euro Stoxx 50 closed down -0.31%.  China’s Shanghai Composite Index closed up +0.05%.  Japan’s Nikkei Stock 225 recovered from a 6-1/2 month low and closed up +0.28%.

Interest Rates

June 10-year T-notes (ZNM25) Wednesday closed down -9 ticks.  The 10-year T-note yield rose +2.1 bp to 4.192%.  June T-notes on Wednesday fell from a 4-week high and closed lower, and the 10-year T-note yield rose from a 4-week low of 4.108%.  T-notes on Wednesday gave up an early advance and turned lower as a slump in European government bonds sparked long liquidation in T-notes. Also, stronger-than-expected US economic reports on Mar ADP employment and Feb factory orders were bearish for T-notes. In addition, Wednesday’s stock recovery curbed safe-haven demand for T-notes.

T-notes on Wednesday initially moved higher on the idea that US tariffs might drive the economy into recession, prompting the Fed to continue cutting interest rates.  Falling inflation expectations are also bullish for T-notes after the 10-year breakeven inflation rate on Wednesday fell to a 1-1/2 week low of 2.321%.

European bond yields on Wednesday finished higher.  The 10-year German bund yield rebounded from a 4-week low of 2.654% and finished up +3.4 bp to 2.721%.  The 10-year UK gilt yield rose from a 1-1/2 week low of 4.591% and finished up +0.7 bp to 4.640%.

ECB Governing Council member Holzmann said he’s against an ECB interest rate cut at this month’s policy meeting, “as we are neutral and inflation is converging to target, there is no reason to become accommodative.”

Swaps are discounting the chances at 77% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Tesla (TSLA) closed up more than +5% to lead gainers in the Nasdaq 100 after Politico reported that Elon Musk will soon step back from his work for the Trump administration and focus on his businesses in the coming weeks. 

Caesars Entertainment (CZR) closed up more than +6% to lead gainers in the S&P 500 after Raymond James added the stock to its “Favorite” list.

GE Vernova (GEV) closed up more than +5% after Susquehanna Financial initiated coverage on the stock with a positive rating and a price target of $370. 

DoorDash (DASH) closed up more than +3% to lead gainers in the Nasdaq 100 after Domino’s Pizza said it would begin accepting orders through the company.

Amazon.com (AMZN) closed up more than +2% after the New York Times reported that the company offered to buy TikTok in the US. 

Rocket Cos (RKT) closed up more than +9% after Deutsche Bank upgraded the stock to buy from hold with a price target of $16.

Citizens Financial Group (CFG) closed up more than +2% after Autonomous initiated coverage on the stock with a recommendation of outperform and a price target of $50.

Fiserv (FI) closed up more than +2% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $260.

Defensive food makers and beverage companies retreated Wednesday with a recovery in the broader market.  As a result, Hershey (HSY) closed down more than -3% to lead losers in the S&P 500.  Also, Mondelez International (MDLZ) closed down more than -2%, and Constellation Brands (STZ) and the Campbell’s Company (CPB) closed down more than -1%.  In addition, General Mills (GIS) closed down -0.89%, Conagra Brands (CAG) closed down -0.83%, and Coca-Cola (KO) closed down -0.75%.

Telecommunication stocks were under pressure on Wednesday. Verizon Communications (VZ), AT&T (T), and T-Mobile US (TMUS) closed down more than -1%.

nCino (NCNO) closed down more than -19% after reporting Q4 adjusted EPS of 12 cents, weaker than the consensus of 17 cents, and forecast 2026 adjusted EPS of 66 cents to 69 cents, well below the consensus of 86 cents. 

Deere & Co (DE) closed down more than -1% after Jeffries said Deere’s second-half outlook is clouded by US trade policy and counter-tariffs on US exports to Europe would affect the company.

Earnings Reports (4/3/2025)

Acuity Inc (AYI), Conagra Brands Inc (CAG), Lamb Weston Holdings Inc (LW), and MSC Industrial Direct Co Inc (MSM).