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The market narrative for the first trading day of a new week was set very early on today: President Trump suggested his formerly draconian tariff policy on virtually all U.S. trading partners would not be as harsh on April 2nd as previously advertised. While in the abstract, a notion like this might signal wavering leadership, market indexes seized this as nothing but good news.

The Dow grew back +597 points, +1.42%, while the S&P 500 went up +100 points exactly, +1.76%. Meanwhile, the real winners today were the Nasdaq, +404 points, +2.27%, and the small-cap Russell 2000, +52 points, +2.57%. The deleveraging from Mag-7 tech growth U.S. AI plays looks to have played itself out, near-term — or at least unclenched its fist. 

Bond yields have drifted upward on the news, as well — up roughly 4 basis points (bps) to +4.338% on the 10-year and +4.041% on the 2-year. This reaches the highest levels we’ve seen on the 10-year in four weeks, and the highest since exactly a week ago on the 2-year yield.

Flash PMI Results Mixed for March
 

After the market opened this morning, S&P flash U.S. Services and Manufacturing PMI results came out for March. They were notably better on the Services side: 54.3 amounts to a three-month high off February’s 15-month low 51.0. Importantly, these numbers are solidly above 50, which is the demarcation point between advancement and retraction.

Manufacturing, however, sank to 49.8 — its lowest level since December — following the previous month’s 52.7, which represented the biggest jump on this metric in almost three years. This disparity may suggest a pulling-forward of business ahead of tariffs being implemented, particularly on exports, which in March showed the slowest decline in nine months.

KB Home Misses Q1 Estimates
 

Mid-level homebuilder KB Home (KBH - Free Report) shares have sunk -9% following the release of its fiscal Q1 results after today’s closing bell. Earnings of $1.49 per share was off the Zacks consensus of $1.56, as well as the $1.76 per share delivered in the same quarter the prior year. Revenues came in at $1.39 billion, beneath the 1.50 billion analysts had been expecting.

Affordability concerns — not just with mortgage rates staying around 7%, but with the potential tariffs increasing costs of imports used to build new houses — were cited in the press release from the company. Guidance was also trimmed a bit on the revenue side, and this represents the first earnings mis in the past nine quarters.

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