Stocks began the week with a rollercoaster session as more tariff talk sent investors reeling, with trading volume hitting an 18-year high. However, the major indexes recovered from steep losses to close well above the lows for the day.
Ahead of today’s opening bell, the futures were indicating that the major indexes would likely start the session sharply higher. Changes of direction may well be driven by news, or even rumors, of negotiations that could moderate the impact of some tariffs. In overnight trading, stocks in Asia closed mostly in the green, highlighted by Japan’s Nikkei Index soaring 6.0%. Meanwhile, the key exchanges in England were showing gains in excess of 2.0% this morning.
The economic calendar this week is relatively lean. On Wednesday, traders will get to pore over the minutes from last month’s Federal Open Market Committee (FOMC) meeting to try and glean some further insight into the central bank’s next move. In the wake of President Trump’s wide-reaching tariffs, fears of renewed inflation and a potential recession have fueled expectations that the Federal Reserve may decide to act more aggressively on the interest-rate front. The fed funds futures were recently pointing to a quarter-point cut in June, and a greater-than-60% chance of a full-point reduction by the end of the year.
On Thursday, we will get the latest update on the inflation front with the Bureau of Labor Statistics’ Consumer Price Index (CPI) for March. The consensus on Wall Street is that the index will show a month-to-month increase of 0.1% (versus 0.2% in February), while the 12-month figure advances 2.6% (down from 2.8% for the year through February). At the ‘core’ level, which excludes food and energy), expectations are calling for a monthly increase of 0.3% (down from 0.2% in February) and a year-over-year advance of 3.0% (down from 3.1%).
The companion Producer Price Index (PPI), which measures price changes at the wholesale level, follows on Friday. Analysts are calling for a month-over-month increase of 0.2% for March, versus a flat reading in February. Meanwhile, the core figure is estimated to show a 0.3% increase, compared to a decline of 0.1% in February.
Summing up Monday’s price moves for the major indexes, the Dow Jones Industrials, at one point plummeting 1,700 points (4.4%), recovered to end the session down 349 points or 0.9%. The S&P 500 rebounded from a 4.7% plunge that briefly pushed it into bear market territory, to close the session down 11 points (0.2%), and the tech-heavy NASDAQ bounced back to end the day 15 points higher (0.1%).
–Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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