MARKET COMMENTARY
Markets are in flux following last week’s reciprocal tariff announcements, capping off the worst three-day stretch for the S&P 500 since Black Monday in 1987. (Yes, it’s just another manic Monday.) The week is off to a rocky start as investors digest the implications of the Trump administration’s aggressive trade agenda, which has sent shockwaves through global supply chains.
The selloff hasn’t been isolated to U.S. equities. Global markets have also turned sharply lower as economic uncertainty ripples outward. For a deeper dive into the tariff landscape and its implications, see our full analysis [here].
Looking ahead, markets are likely to remain range-bound as they brace for the next wave of reciprocal tariffs set to go into effect on Wednesday, including a 37% tariff on Chinese imports. We expect to see an acceleration in import activity this month as foreign companies attempt to front-run the new tariff regime.
On the monetary policy front, Wednesday will bring the release of the latest FOMC meeting minutes. Markets will be combing through the details for any signals on rate direction—especially with CPI and PPI data due Thursday and Friday. The odds of a rate cut at the Fed’s May meeting are now at 40%, and any signs of economic weakness could push those expectations higher. CPI is anticipated to come in hotter than expected, and markets will be laser-focused on how that may influence Fed action.
Adding to the week’s pivotal moments, key earnings from JPMorgan, Wells Fargo, and BlackRock will offer insight into the health of the financial sector and broader investor sentiment.
Newton Model Insights:
Our Newton Model shows U.S. equities hitting new relative lows compared to foreign counterparts following last week’s sell-off. Foreign Developed Markets took the lead, while Emerging Markets also pulled back. On a sector level, Consumer Defensive, Utilities, and Healthcare held up best, while Technology, Communications, and Financials experienced the sharpest drawdowns.
In fixed income, Long-Term Bonds climbed to the top of the leaderboard as investors sought safety, driving the 10-year Treasury yield below 4% for the first time since November. Short-term bonds also remain resilient, while floating-rate and high-yield credit lagged in the flight to quality.
Bottom Line:
With trade tensions escalating and monetary policy direction uncertain, downside risks remain elevated. Unless tariff threats de-escalate, markets may continue searching for a bottom.
Economic Releases This Week
Monday: Consumer Credit
Tuesday: NFIB Optimism Index, San Francisco Fed Speaks
Wednesday: Wholesale Inventories, Richmond Fed Speaks, Minutes from Fed’s March FOMC Meeting, Reciprocal Tariffs Go into Effect
Thursday: Initial Jobless Claims, Consumer Price Index, Fed Governor Bowman Testifies to Senate, Monthly US Federal Budget
Friday: Producer Price Index, Consumer Sentiment (prelim), New York Fed Speaks
Stories to Start the Week
Republicans Fracture on Trump’s Tax Bill
Bessent Seeks “Meaningful Negotiations” with More Than 50 Countries
CEOs Think the US is “Probably in a Recession Right Now”, Say BlackRock’s Larry Fink
EU Commission Proposes 25% Counter-Tariffs on Some US Imports, Documents Shows
Oil Prices Drop to Lowest Since 2021 Amid Fears of a Global Trade War
What is Newton?
Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques on the current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score.
Trend & level both matter. For example, a name that moves from an 18 to a 16 would signal a strong level yet slight exhaustion in the trend.
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.