MARKET COMMENTARY
Markets kicked off the week on a volatile note as investors reacted to an escalation in trade tensions and signs of persistent inflation. U.S. stocks struggled for direction following President Trump’s renewed tariff agenda, which now includes sweeping auto tariffs targeting all of America’s major trade partners. These new levies, set to go into effect on April 2 unless extended or modified by Wednesday’s deadline, have cast a cloud over key sectors such as autos, semiconductors, and consumer goods. The overhang of trade uncertainty has been compounded by last week’s hotter-than-expected Core PCE reading (0.4% MoM / 2.8% YoY) and the lowest University of Michigan Consumer Sentiment print since 2022—fueling fears that inflation may remain elevated and the Fed could stay on hold longer than anticipated. Goldman Sachs added to the pessimism, cutting its S&P 500 price target over the weekend and citing slower expected economic growth and higher recession odds (now around 35%).
Investors are also bracing for a critical slate of economic data this week, including the ISM Manufacturing and Services reports and Friday’s March employment report. These releases are expected to provide a more detailed pulse on economic momentum. Current forecasts suggest around 140,000 new jobs added in March, a modest pullback from February, while ISM data will shed light on whether output across the economy is cooling further. These indicators will likely influence the Fed’s next steps as policymakers weigh sticky inflation against softening growth. Globally, the selloff wasn’t confined to U.S. markets—European and Asian equities also declined sharply, with Japan’s Nikkei now down more than 10% from recent all-time highs. The combination of geopolitical risk, trade uncertainty, and mixed macro data continues to keep risk sentiment on edge.
According to our Newton Model, all regions were hit hard, but Emerging Markets continue to lead. Foreign Developed is now tied with U.S. Large Cap as that area has softened over the last few weeks. Sector-wise, Communication Services has surged to the top of the leaderboard, staging a sharp comeback, while Materials and Industrials have slid to the bottom. In fixed income, Short-Term Bonds and Floating Rate remain the strongest areas, offering yield with reduced duration risk. In contrast, long-term Treasuries and Corporate Bonds continue to struggle.
Economic Releases This Week
Monday: Chicago Business Barometer (PMI)
Tuesday: Richmond Fed Speaks, S&P Final US Manufacturing PMI, ISM Manufacturing, Construction Spending, Job Openings, Auto Sales
Wednesday: ADP Employment, Factory Orders
Thursday: Initial Jobless Claims, US Trade Deficit, S&P Final US Services PMI, ISM Services, Fed Vice Chairman Speaks
Friday: US Employment Report, US Unemployment Rate, US Hourly Wages, Fed Chairman Powell Speaks
Stories to Start the Week
Goldman Raises Odds of US Recession to 35%
Rocket to Buy Mr. Cooper Group in $9.4 Billion Mortgage-Industry Deal
Meet the “Dirty 15” Countries That Could Be Hit Hardest By Trump’s Tariffs
France’s Marine Le Pen Barred From Running For Public Office For 5 years After Embezzlement Conviction
CoreWeave Shares Slump Nearly 10% In Second Day of Trading
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.