The S&P 500 Index ($SPX) (SPY) Monday closed up +0.79%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.78%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.57%.  June E-mini S&P futures (ESM25) are up +0.78%, and June E-mini Nasdaq futures (NQM25) are up +0.52%. 

Stock indexes posted moderate gains on Monday in hopes that President Trump will adopt a softer stance toward his tariff policies.  Last Friday, President Trump said he would temporarily exempt consumer electronics from reciprocal tariffs and the baseline 10% global tariffs.  However, a 20% tariff still applies to electronics shipped from China. 

Chip makers and technology stocks moved higher on the tariff news to lead the overall market higher.  Stocks extended their gains Monday as US automakers and auto parts makers rallied when President Trump said he is exploring possible temporary exemptions to tariffs on imported vehicles and parts to give auto companies more time to set up US manufacturing. 

Monday's sharp drop in T-note yields also supported stocks.  The 10-year T-note yield fell -11.6 bp to 4.374% on reduced inflation concerns after President Trump exempted reciprocal tariffs on most consumer electronics late last Friday.  T-note yields extended their decline Monday on dovish comments from Fed Governor Waller, who said he expects the tariff impact on inflation to be temporary, and in that case, interest rate cuts would "very much" be on the table for the latter half of 2025.

Last Wednesday, President Trump announced a 90-day pause on higher reciprocal tariffs on 56 nations but left the new 10% baseline tariff on virtually all nations in place.  Meanwhile, the EU last Thursday said it will delay for 90 days the implementation of 25% tariffs on 21 billion euros worth of US goods sent to Europe.

Stocks have been under pressure over the past five weeks 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 April 2, President Trump signed a proclamation to implement a 25% tariff on US auto imports.  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.  On April 5, a 10% baseline tariff for virtually all nations took effect.  Last Friday, China raised tariffs on all US goods to 125% from 84% in retaliation for the US raising tariffs on Chinese goods to 145%. 

The US tariff turmoil has undercut the dollar and boosted gold.  The dollar index last Friday sank to a 3-year low, and gold prices soared to an all-time high.  The markets are concerned about the effects of US trade policies, which have caused consumer confidence to plummet and have prompted many companies to suspend their capital spending plans, a negative factor for GDP growth.  Also, the dollar is facing a confidence crisis as the US weaponizes tariffs, diminishing the dollar's reserve-currency status and prompting some foreign investors to liquidate their dollar assets. 

The markets will focus on US trade policy news during this holiday-shortened week.  On Wednesday, US March retail sales are expected to climb +1.4% m/m, and March retail sales ex-autos are expected to climb +0.4% m/m.  Also, on Wednesday, March manufacturing production is expected to be up +0.3% m/m.  Finally, on Wednesday, Fed Chair Powell will speak before the Economic Club of Chicago about the economic outlook.  On Thursday, Mar housing starts are expected to fall -5.7% m/m to 1.416 million, and Mar building permits are expected -0.6% m/m to 1.450 million.

The markets are discounting the chances at 19% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Q1 earnings reporting season began last Friday as big US banks reported their results.  According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. 

Overseas stock markets on Monday settled higher.  The Euro Stoxx 50 closed up +2.59%.  China's Shanghai Composite Index climbed to a 1-week high and closed up +0.76%.  Japan's Nikkei Stock 225 closed up +1.18%.

Interest Rates

June 10-year T-notes (ZNM25) Monday closed up +1-0.5/32 points.  The 10-year T-note yield fell -11.6 bp to 4.374%.  June T-notes rallied Monday due to reduced inflation concerns after President Trump exempted reciprocal tariffs on most consumer electronics late last Friday.  T-notes also had carryover support from last Friday when the Financial Times reported that Boston Fed President Collins said the Fed is ready to help stabilize markets if needed.  T-notes raced to their high Monday afternoon on dovish comments from Fed Governor Waller, who said that if the tariff impact on inflation is temporary, then Fed rate cuts would be on the table later this year. 

European bond yields on Monday moved lower.  The 10-year German bund yield fell -5.9 bp to 2.512%.  The 10-year UK gilt yield fell -9.4 bp to 4.660%.

Swaps are discounting the chances at 96% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

US Stock Movers

Chip makers and technology hardware stocks climbed Monday after President Trump temporarily paused reciprocal tariffs on consumer electronics.  As a result, Western Digital (WDC) closed up more than +4%, and Seagate Technology Solutions (STX) closed up more than +3%.  Also, Micron Technology (MU) and Texas Instruments (TXN) closed up more than +2%.  In addition, Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), ON Semiconductor Corp (ON), NXP Semiconductors NV (NXPI), and GlobalFoundries (GFS) closed up more than +1%. 

Computer makers and electronic retailers moved higher Monday after the Trump administration exempted consumer electronics from its reciprocal tariffs.  As a result, Dell Technologies (DELL) closed up more than +3%, and Best Buy (BBY) and HP Inc (HPQ) closed up more than +2%.

US automakers and auto parts makers rallied Monday after President Trump said he is exploring possible temporary exemptions to tariffs on imported vehicles and parts to give auto companies more time to set up US manufacturing. As a result, Stellantis NV (STLA) closed up more than +6%, and Aptiv Plc (APTV) closed up more than +5%.  Also, General Motors (GM) and Ford Motor (F) closed up more than +4%, and Autoliv (ALV) closed up more than +3%. 

Palantir Technologies (PLTR) closed up more than +4% after NATO acquired an AI-powered military system from the company.

PDD Holdings (PDD) closed up more than +4% to lead gainers in the Nasdaq 100 after President Trump paused reciprocal tariffs on most consumer electronics, which will benefit Chinese exporters.

DuPont de Nemours (DD) closed up more than +3% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight. 

Intel (INTC) is up more than +2% after saying it is nearing an agreement to sell a stake in its programmable chips unit, Altera, to Silver Lake Management.

Atlassian Corp (TEAM) closed up more than +1% after Baird upgraded the stock to outperform from neutral with a price target of $255.

Freeport-McMoRan (FCX) closed up more than +1% after HSBC upgraded the stock to buy from hold with a price target of $40.

Defensive healthcare stocks are falling today due to the strength in the broader market.  As a result, Humana (HUM) closed down more than -3% to lead losers in the S&P 500, and UnitedHealth Group (UNH) closed down more than -2% to lead losers in the Dow Jones Industrials.  Also, Centene (CNC) closed down more than -1%. 

Hotel stocks were under pressure Monday on downgrades.  Hyatt Hotels (H) closed down more than -3% after Goldman Sachs downgraded the stock to sell from hold with a price target of $110.  Also, Hilton Worldwide Holdings (HLT) closed down more than -1%, and Marriott International (MAR) closed down -0.77% after Goldman Sachs downgraded the stocks to neutral from buy.

Meta Platforms (META) closed down more than -2% as the US Federal Trade Commission's antitrust trial began Monday seeking to break up the company. 

DaVita (DVA) closed down more than -2% after disclosing a ransomware incident that has encrypted some aspects of its network.

Earnings Reports (4/15/2025)

Albertsons Cos Inc (ACI), Bank of America Corp (BAC), Citigroup Inc (C), Interactive Brokers Group Inc (IBKR), JB Hunt Transport Services Inc (JBHT), Johnson & Johnson (JNJ), Omnicom Group Inc (OMC), PNC Financial Services Group Inc (PNC), Sandisk Corp/DE (SNDK), United Airlines Holdings Inc (UAL).