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Market Recap

Markets took a bit of a break yesterday, evidenced by the muted results from broad equity indexes. Mag 7 and technology stocks detracted from returns given the 0.10% decline in the Nasdaq Composite, the 0.06% gain in the S&P 500, and the 0.28% rise in the Dow. Small caps set the pace, closing 0.41% higher. Among Mag 7 names, Apple (AAPL) and Meta Platforms (META) were the only to show up in the top ten contributors to return for the SPDR S&P 500 ETF Trust(SPY). Apple saw gains on news of the company planning to manufacture all US-bound iPhones in India, avoiding China tariffs and Meta bulls lifted offers in hopes of the company prevailing in its antitrust lawsuit with the Federal Trade Commission.

Sectors closed higher except for Technology and Consumer Staples which fell 0.16% and 0.33%, respectively as tariff expectations and overall consumer health weighed on both. The remaining sectors post gains ranging from 0.04%(Consumer Discretionary) to 0.70% (Energy), despite crude dropping 1.51% (BRENT) to 1.61% (WTI).

The Tematica Select Model Suite saw mixed results, with 5 strategies ending the day essentially flat. Leadership came from Nuclear Energy & Uranium and Space Economy, and laggards included the CHIPs Act and Data Privacy.
 

Tariffs and Uncertainty Take Their Toll on Corporate Guidance

With the current Fed quiet period, the likely factors driving the market this week will be the rapid-fire pace of quarterly earnings, developments on the trade and policy front from the White House to drive market action, and the start of April economic data. In keeping with those three forces, we will want to revisit equity futures closer to the opening bell following downside guidance issued this morning from Polaris Industries (PII), Hilton (HLT), Volvo Cars (VLVOF), Electrolux, and others as well as pulled guidance from NXP Semiconductors (NXPI) last night and UPS (UPS) and General Motors (GM) this morning. As of this writing, we have yet to hear from the likes of Coca-Cola (KO), Corning GLW), JetBlue (JBLU), Sherwin Williams (SHW), SoFi Technologies (SOFI), and Smithfield Foods (SFD).

As those results pour in, the market will continue to update how it sees equity markets starting today. Factoring into that thinking will be what is learned from this morning’s 8:30 AM ET White House briefing that will include Treasury Secretary Scott Bessent. Recent comments from Bessent point to potential trade deals with India and Japan, while others indicate a long road to a trade deal with China. At the same time, stern comments yesterday from Chinese Foreign Minister Wang Yi that appeasement will only embolden the “bully” diminish the prospects for a quick trade deal with China.

We could also see Bessent discuss more of President Trump’s economic agenda and its reported Fourth of July soft deadline. The “megabit” includes trade, a multi-trillion tax cut package, and deregulation seems like a tall order with Senate Majority Leader John Thune calling the deadline “aspirational”. House Speaker Mike Johnson has set an end-of-May goal for the House to pass legislation that includes a renewal of Trump’s first-term cuts and a fresh round of levy reductions, partly paid for by curbing federal spending.

We’ll know more after this morning’s White House briefing but barring any meaningful developments on trade deals and tariffs, investors should brace for more downside guidance to come during this busiest week of the March quarter earnings season. While we are not ones to pat ourselves on the back much if ever, we will say the earnings season so far is playing out largely as we expected. Recent comments from Amazon (AMZN), Nvidia (NVDA), and Alphabet (GOOGL)confirm demand for AI and data center chips remains strong. Earnings from SAP SE (SAP) and ServiceNow(NOW)confirm AI adoption is accelerating. We continue to read of fresh cyber-attacks and cybersecurity companies embracing AI to fend off bad actors while consumers feel the pinch of economic uncertainty and inflation.

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