Equities end Higher After Choppy Trade as Earnings, Data, Tariffs Gauged

Economic

Stocks

Summary:

Corporate profits, the companies that are most impacted by tariffs, are doing what we would expect, they're cutting guidance or they're suspending guidance.

U.S. stocks closed solidly in positive territory on Tuesday, after seesawing between modest gains and losses in choppy trading as investors assessed the latest round of corporate earnings, economic data and changes on the trade policy front.

U.S. Treasury Secretary Scott Bessent predicted China could lose 10 million jobs quickly due to tariffs, but signaled progress on trade deals with other countries including Japan and India.

The world's two largest economies have been at the center of a global trade war, sparked by tariff announcements on April 2 by the Trump administration on countries around the globe, which has stoked investor concerns about rapidly slowing global growth and a rekindling of price pressures.

Commerce Secretary Howard Lutnick said U.S. President Donald Trump will sign an order on Tuesday giving automakers building vehicles in the U.S. relief from part of his new 25% vehicle tariffs to allow them time to bring parts supply chains back home.

Automaker shares showed little reaction to the potentially lighter tariffs, and General Motors (GM.N), opens new tab shares ended lower after the company reported strong quarterly results but rescinded its annual forecast.

The blue-chip Dow (.DJI), opens new tab was led by gains in Honeywell (HON.O), opens new tab, which jumped after reporting a rise in adjusted profit for the first quarter, and paint maker Sherwin-Williams (SHW.N), opens new tab, which rallied after its quarterly profit beat estimates.

Also among Dow components, Coca-Cola (KO.N), opens new tab closed higher after beating revenue and profit estimates.

"A lot of the economic data is going to be mixed, it's going to be really hard to discern tariff impacts probably for the next month or two," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

"Corporate profits, the companies that are most impacted by tariffs, are doing what we would expect, they're cutting guidance or they're suspending guidance."

Economic data pointed to an increasing impact from the trade picture. The U.S. trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of tariffs while a separate report from the Conference Board showed its consumer confidence index dropped to its lowest reading since May 2020, while job openings indicated a relatively stable labor market.

"Trump‘s tariffs have pushed expectations off a cliff," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. "Maybe the silver lining is that it’ll be hard to not see some improvement in expectations over the next few months."

According to preliminary data, the S&P 500 (.SPX), opens new tab gained 31.93 points, or 0.56%, to end at 5,560.68 points, while the Nasdaq Composite (.IXIC), opens new tab gained 93.33 points, or 0.54%, to 17,459.46. The Dow Jones Industrial Average (.DJI), opens new tab rose 289.91 points, or 0.72%, to 40,517.50.

More economic data is due this week, culminating in Friday's key government payrolls report, along with earnings from several of the "Magnificent Seven" group of megacap stocks such as Apple (AAPL.O), opens new tab and Microsoft (.MSFT.O), opens new tab, with investors likely to home in on any signs of tariff impact.

United Parcel Service (UPS.N), opens new tab slipped after its quarterly results and said it would cut 20,000 jobs as it sheds deliveries for Amazon.com (AMZN.O), opens new tab. While each of three major indexes remains in negative territory for the year, stocks have shown signs of stabilizing in recent weeks, with the S&P 500 registering its sixth straight session of gains, its longest win streak since a seven-day run in November.

HSBC became the latest brokerage to trim its year-end target for the S&P 500 index, cutting it to 5,600 from 6,700 earlier.

Wells Fargo (WFC.N), opens new tab gained after announcing a stock buyback program of up to $40 billion.

Source: Reuters

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Manuel

Bond

Economic

U.S. corporate bond markets are showing signs of caution about the economy and inflation despite a rebound in new issuances and credit spreads in the weeks since President Donald Trump first announced harsh tariffs and then provided temporary relief on them, bond market experts said.

Some 15 investment-grade companies, including Google's parent Alphabet (GOOGL.O), opens new tab, issued new bonds on Monday. In a sign that the administration’s rollbacks on some tariffs had brought back investor appetite, the issuances that raised a total of $18.3 billion saw $95 billion in orders, according to Informa Global Markets data.

When corporate bond offerings usually get more orders than the amount of debt a company is willing to raise, it is seen as a sign of strong liquidity conditions in the fixed income market.

At the same time, spreads – or the premium investors demand over Treasuries – for high-grade bonds had tightened by 17 basis points from the high reached on April 9, a sign that there was more demand for these bonds. The spreads on high-yield bonds had come in by 72 basis points from the high touched on April 4.

Even so, bond market experts said the numbers betrayed persistent nervousness among investors about the economic and policy uncertainty around tariffs.

Investors, they said, were still shying away from taking on too much risk, preferring the highest-rated companies even in investment-grade and worrying about the outlook of interest rates amid inflation fears due to tariffs.

"Sentiment is still fragile,” said Zachary Griffiths, head of investment-grade and macro strategy at CreditSights.

Griffiths said the demand for bonds on Monday was still "a sign of a risk-off sentiment” that increased when Trump announced high tariffs on imports from dozens of countries. That had resulted in a preference for sovereign bonds and high-quality corporate bonds over other riskier assets.

In addition, Griffiths said, investors worried that inflationary pressures due to tariffs will make the Federal Reserve less willing to ease rates. “That just means credit spreads are biased wider," he added.

Trump’s tariff announcement, which the administration billed as “Liberation Day,” triggered pandemonium in global markets, with investors fleeing risky assets such as stocks, while exiting U.S. assets in droves.

Investors pulled $6.1 billion from high-grade debt funds and $9.6 billion from high-yield debt funds in the week that followed the Liberation Day tariff announcements, Lipper U.S. Fund Flows data showed.

In the weeks since, Trump delayed the imposition of tariffs to allow countries to negotiate them and rolled back some measures, such as some duties on foreign parts in cars manufactured in the United States.

Bond fund outflows have continued but slowed. During the week ended April 23, fund outflows for high-grade funds slowed to $1.14 billion, while high-yield stood at $1.56 billion.

Dan Krieter, credit strategist at BMO Capital Markets, said Monday's bond offerings in the primary market showed a preference for better quality securities even within the investment-grade bonds.

Monday's BBB-rated borrowers, or those on the fringes of investment-grade, paid an average new-issue premium of 3 basis points compared to AA or A-rated borrowers of just below zero.

It "increases the rationale that further narrowing (of credit spreads) from here may prove difficult if investors continue to prioritize defensiveness at the current macroeconomic juncture," Krieter said.

Edward Marrinan, credit strategist at SMBC Nikko Securities, called it a market that is still on high attention despite the pickup in primary issuance and tightening of credit spreads over the last week.

"Companies should issue bonds now rather than wait because market conditions are relatively stable at present,” Marrinan said. “Conditions could change in coming days with the release of labor market and inflation economic data and the ongoing risk of adverse headlines on trade and tariff policy.”

Griffiths at CreditSights said his firm's probability-weighted forecasts for year-end credit spreads were at 129 basis points for investment-grade and 425 basis points for high-yield – higher than the current levels but not reflective of a crisis.

"They are capped by what we expect to be more demand if spreads widen,” Griffiths said. “So, while funding costs could rise, we do not expect it to be prohibitively expensive to issue bonds, especially for higher-rated borrowers."

On Tuesday, six new high-grade bond offerings were in the market, including from Goldman Sachs Private Credit and Las Vegas Sands (.LVS.N), opens new tab, and two high-yield ones, according to Informa.

Source: Reuters

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Manuel

China–U.S. Trade War

Economic

The auto industry finally received some clarity from the White House, with a few exemptions coming to President Trump’s auto tariffs.

Confirming an earlier report from the Wall Street Journal, the government will aid automakers by preventing tariffs on foreign-made cars stacking on top of other tariffs currently imposed by the administration, a senior commerce department official said on a call with reporters.

This means automakers paying Trump’s auto tariffs on imports won’t also be charged for other duties. The White House is calling it “de-stacking,” meaning automakers will pick the highest tariff that applies to them and only pay that one, meaning no steel or aluminum tariffs or Chinese fentanyl tariffs on top of the existing tariff on foreign autos.

The move would also be retroactive to April 2nd, when the tariffs began, meaning that automakers could be reimbursed for tariffs already paid. The changes will become official when President Trump signs an executive order later on Tuesday, with more details released at that time, according to the spokesperson.

“Automakers will pay either steel or auto tariff, whichever is higher, and any rebates applied will be paid from tariff revenue, so no cost to the government,” the department official said.

Furthermore, tariffs on auto parts, coming on May 3rd, would also be reimbursed up to an amount equal to 3.75% of the value of a US-made car for one year, then 2.5% the year after before phasing out.

The 3.75% calculation comes from multiplying 15%, which is the amount of foreign made-parts automakers said they would need time to replace, multiplied by the 25% tariff on foreign auto parts. This would be an “offset,” the official said, against the automaker’s tariff bill for importing those parts.

In the second year of the plan the 2.5% reimbursement comes from multiplying 10%, which the administration hopes will be the percent of foreign parts thats can’t be sourced yet in the US, multiplied by the 25% parts tariff.

The commerce department official said that these changes to the auto parts tariffs will help automakers get more runway to onshore their supply chain, expand their plants and hire more US workers.

“Finish your cars in America, and you win,” the official said.

Automakers, in particular the Big Three, were seeking clarity from the White House on tariff exemptions, and the moves coming likely today are welcome, though still a burden comparatively speaking.

“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers, and consumers. We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America. Ford sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential,” Ford CEO Jim Farley said in a statement.

Farley added: “If every company that sells vehicles in the US matched Ford’s American manufacturing ratio, 4 million more vehicles would be assembled in America each year.”

“Stellantis appreciates the tariff relief measures decided by President Trump,” Stellantis Chairman John Elkann in a statement. “While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the US Administration to strengthen a competitive American auto industry and stimulate exports.”

GM, which earlier on Tuesday said investors could not rely on its 2025 profit guidance in light of tariffs, said it would conduct its Q1 earnings call on Thursday in order to parse the deal and give investors an update.

“We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together,” GM CEO and chair Mary Barra said in a statement.

Barclays analyst Dan Levy doesn’t see the exemptions as materially changing the tariff landscape for automakers.

“While the tariff softening is positive, we expect benefits to be somewhat limited vs. the greater tariff cost. The key tariff headwinds remain (25% vehicle tariff, 25% parts tariff, 20% China Fentanyl tariff),” Levy wrote in a note to clients.

Source: Yahoo Finance

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Thomas

Cryptocurrency

Trump Establishes U.S. Strategic Bitcoin Reserve Amid Policy Shift

Trump's administration has initiated a Strategic Bitcoin Reserve, marking a significant policy shift within the first 100 days. The move includes appointing David Sacks as "Crypto Czar."

The policy shift indicates a new direction supporting digital assets, contrasting former administration restrictions. Market responses reflect optimism tempered by regulatory changes.

U.S. Launches Bitcoin Reserve Under New Crypto Agenda

Trump's establishment of a federal Bitcoin reserve is part of a broader pro-crypto agenda, aligning with his public commitments. David Sacks, a known venture capitalist, takes charge as the administration’s "Crypto Czar."

The administration is engaging key regulatory bodies, such as the SEC and Treasury. The actions reflect a strategy to bolster innovation and digital asset compliance, with changes designed to steer focus away from restrictive measures.

Donald J. Trump, President of the United States: “President Trump promised to create a Strategic Bitcoin Reserve and a Digital Assets Stockpile. President Trump appointed a ‘crypto czar’...” White House Fact Sheet

Volatility as Markets Weigh Federal Bitcoin Initiative

Immediate market reactions showcase volatility as industry stakeholders assess federal crypto initiatives. These developments present both opportunities and risks, prompting a cautious response from institutional investors.

Trump's actions aim to juice the financial markets, pushing firms towards regulatory adaptations. Political shifts signal an openness to blockchain technology, as outlined in the White House Executive Order, calling for comprehensive regulatory reviews.

U.S. Crypto Policy Reversal Mirrors Global Trends

This reversal from Executive Order 14067 shifts the U.S. from restrictive to supportive crypto policies. Similar actions in other nations, like El Salvador's Bitcoin adoption, provide varied outcomes.

Future results depend on how markets integrate new regulations. Past data suggests volatility, yet experts indicate potential for financial inclusivity and technological advancement with significant policy backing.

Source: CryptoSlate

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Adam

Commodity

After a standout 12-month performance that has seen gold prices rise by nearly 42%, investors would do well to revisit the gold investment thesis, according to Columbia Business School professor and QuantStreet Capital partner Harry Mamaysky.

In a recent analysis for VettaFi, Mamaysky noted that since the Fed began its monetary easing cycle, cutting its interest rate target by 1%, gold has done what it typically does: post gains.

“[G]old (as represented by the iShares Gold Trust (IAU)) has been one of the best-performing asset classes, with gains outstripping those of the S&P 500 index (SPX), Treasuries (represented by the Vanguard Intermediate-Term Treasury ETF (VGIT)), the Nasdaq-100 Index (represented by the Invesco QQQ Trust (QQQ)), bitcoin, and global stocks ex-U.S. (represented by the Vanguard Total International Stock ETF (VXUS)),” he wrote.

Mamaysky said that much of gold’s recent strength is due to the uncertainty caused by the Trump administration’s trade policy. “Since President Trump’s April 2 'Liberation Day' tariff announcement, gold is up 6.2%, while U.S. stocks are down close to 7%, and international stocks and bitcoin are down around 2%,” he said.

Mamaysky then lists a number of factors that have helped drive gold prices higher, and that support the investment case for holding gold going forward.

The first of these is persistent buying by central banks around the globe. “[C]entral banks have been net buyers of gold for the last several years, a trend that might accelerate given recent market turmoil caused by trade uncertainty,” he said.

Gold’s effectiveness as a hedge against market and economic uncertainty is shown through two statistical measures.

“Gold’s daily price changes have very low correlations with price changes of other asset classes,” Mamaysky wrote. “For example, over the last year, the correlation of daily gold and S&P 500 returns has been 21%, whereas the correlation of bitcoin and S&P 500 returns has been 46%. This low correlation means gold is a diversifying influence in investor portfolios.”

Gold also tends to do well in 12-month periods where the overall market performs poorly. “In 1-in-20 bad 12-month return periods for the S&P 500 — when the S&P 500 is down 25% on average — gold’s average return has been a positive 2%,” he noted

Mamaysky said that QuantStreet’s machine learning forecasting model is bullish on gold. “The model identifies several forecasting variables for each tracked asset class,” he said. “For gold, the model identifies the U.S.’ versus Germany’s interest rate differential (dxy_carry) and the level of two-year Treasury yields (gt2) in the U.S. as important forecasting variables. The currently elevated — relative to its history in the model training window — level of two-year yields generates a high one-year ahead return forecast.”

Another element that supports the gold investment thesis is QuantStreet’s gold forecasting model, “which has good out-of-sample forecasting properties, as seen by its out-of-sample R-squared (a measure of the goodness of fit of future one-year return forecasts versus actual one-year ahead return outcomes) of 48%,” he said.

Mamaysky then outlines the elements that argue against gold investment in the current environment.

The first of these is its high rate of return over the past year. Mamaysky shared a chart that shows the price of front-month gold futures relative to CPI. “The gold-to-price-level ratio is at 9.77, which is an all-time high dating back to the mid-1970s,” he noted. “Last year, we also mentioned this elevated level as a concern for the gold thesis, though at that time the ratio was only at 6.77.”

“Another factor in favor of gold as a portfolio hedge is the gold-to-bitcoin ratio, which now stands at 0.039, quite a bit higher than last year’s ratio, but still well off recent highs established in late 2022,” he added.

“Several factors argue in favor of gold’s inclusion in investor portfolios, but the elevated valuation level of gold (relative to the inflation price index) argues for some caution,” Mamaysky concluded, adding that while QuantStreet continues to hold gold in their portfolios, “we regularly evaluate the investment thesis and other relative opportunities, and our holdings of gold may decrease or increase in the coming weeks and months.”

source : Kitco

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Adam

Stocks

US stocks melted down and market volatility soared after President Donald Trump announced his across-the-board punitive tariffs regime on April 2. While international stocks got hurt too, overall they’ve done better.

Sure, US stocks were considered overvalued coming into 2025. But the loss of trillions of dollars over a matter of days in April was extreme. And it wasn’t much comfort when stocks staged some mini-relief rallies on hopes that things might not be quite as bad as feared because Trump was postponing or lessening certain tariffs, or there were signs his advisers convinced him firing the Federal Reserve chair would be bad for markets and the economy.

Coupled with the decline in the value of the US dollar — long considered to be the world’s reserve currency — the negative economic effects of Trump’s tariffs are pushing investors to wonder if the US is still the strongest and safest bet relative to other countries.

So far, the answer to that question seems to be a very qualified “Yes, but …”

“People are still trying to figure out what’s happening,” said Amy Arnott, a chartered financial analyst and portfolio strategist at Morningstar.

As things stand, “both cyclical and structural changes to U.S. exceptionalism are now on the table, being priced at a greater-than-zero probability of weakening,” the global equity team at investment firm Wiliam Blair noted last week in a blog.

Looking abroad for value

There’s a question of whether US investors should allocate more — or just some — money to international equities.

Individual US investors typically haven’t had a lot — or even any, in some cases — exposure to stocks from countries with developed or emerging economies in their portfolios. And they haven’t suffered for it in the past decade. That’s because US stocks handily outperformed non-US stocks by as much as four to five percentage points a year, Arnott said.

But this year, the reverse may be happening.

The Morningstar Global Markets Index ex-US was up 6.46% year to date through April 24. By contrast, its US Markets Index was down 6.59%.

The reason is likely two-fold, Arnott said: International stocks are less expensive than their US cousins and there’s been heightened concern and uncertainty about US policies.

Over the next several years, Vanguard’s investment outlook, for instance, continues to forecast that international equities will outperform US stocks due to more attractive valuations.

Still, net money flows into US equity mutual funds and ETFs have remained positive year to date through mid-April, according to data from the Investment Company Institute, suggesting US equities remain an attractive bet overall.

Diversity remains a good hedge

However, this year has reminded investors why having a diversified portfolio is helpful when US stocks are dropping.

Consider the balanced model portfolio with 60% stocks and 40% bonds. Its best feature: a lower risk and volatility profile than portfolios more heavily invested in stocks.

Such a portfolio that only invested in US stocks for the equity portion was down roughly 3% year to date — much better than the bigger drops on US stock indexes. But if 20% of the stock portion had been in international equities, the portfolio would be down just 0.41%, Arnott said. “If you had international exposure, you would have done significantly better.”

Of course, US Treasuries have been on a scary trip too in the past month. Normally when stocks are plunging, investors pour into US government bonds, pushing their prices up and their yields down, because they’re buying safety — that they won’t lose money and that they will always be paid back. But in the second week of April there was a sell-off, pushing Treasury yields higher — and in the case of the 10- and 30-year bonds, yields have remained higher than they were on April 2.

Granted, it’s not the first time US bonds have bucked their reputation. See: Your portfolio returns for 2022.

The question is, will this remain a problem going forward? Answer: Who knows?

Much may depend on how the US and world economies adjust to the many trade wars that have been ignited, which economists warn will make US inflation worse and slow economic growth.

“In a scenario where we have inflation flaring up again, that could put pressure on stocks and bonds. So, holding a diversified portfolio with bonds and international stocks is not a magic bullet in every market. But it improves the odds that you’ll have some ability to withstand volatility,” Arnott said.

A path forward for now

If your prime exposure to the markets is through a retirement-year target date fund in a 401(k) or IRA, you may already have the diversification you need, especially when it comes to international equities.

That’s because for years, target date funds have been overweight in international stocks, said Jason Kephart, a senior principal of multi-asset strategy ratings at Morningstar.

Compared to all equity mutual and exchange traded funds, which aim to hold 25% in non-US assets, target date funds have allocated 30%, Kephart said.

That has started to pay off this year, Kephart said.“Diversification is finally being rewarded,” he said.

Similarly, a target date fund will make adjustments to the bond holdings in your portfolio, bumping up the allocation to a diversified mix of high-quality government and corporate bonds the closer you get to your target retirement year (e.g., 2030, 2040, 2050).

But if you’re not in a target-date fund and you are managing the asset allocation in your retirement account, you might consider having up to 35% of the stocks portion of your portfolio in non-US equities, Arnott said. That would echo how the MSCI All Countries World Index (ACWI) is weighted toward non-US stocks.

Or depending on your risk tolerance, you might follow the advice of Adam Grossman, a chartered financial analyst and founder of Mayport Wealth Management. In his latest weekly newsletter he suggests an allocation to international stocks “in the neighborhood” of 20%. “According to the data, that’s enough to deliver a diversification benefit, but not so much that it introduces significant currency risk,” he wrote.

Either way, you can get your exposure to non-US stocks through a low-cost world markets ex-US index fund. (Morningstar offers its pick of the top 10 here.)

As for bonds, Arnott suggests looking for a core bond fund for your 401(k) — which will be invested in different types of government and investment-grade corporate bonds.

If you’re investing in bonds on your own — say, for the portion of your money that you want readily available to draw on for living expenses when you’re in or near retirement — “Focus your bond allocation on the short- to intermediate-term portion of the yield curve. I would be very cautious with longer-term Treasuries. That is where the risk is greatest,” she said.

source :cnn

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Kevin Du

Political

“The punchline is I think this is really status quo,” Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, told BNN Bloomberg in a Tuesday interview following Monday’s federal election that resulted in a minority government for the Liberals, according to CTV News projections.

“You effectively have the same team in place, at least, who has governed for the past 10 years.”

Nuttall said that while Carney made numerous comments on the campaign trail about supporting Canada’s energy industry, it remains unclear what exactly the next Liberal government’s energy priorities will be.

“Details were extremely light. We heard things like Canada needs to be a global energy superpower, then it pivoted towards a clean energy superpower, so there’s pros and cons,” he said.

“Given the minority government status, one positive coming out of this is the unlikelihood of an emissions cap actually becoming a law… it was something (the Liberals) were likely to try to do but given minority status that looks like it’s challenged.”

Nuttall said that the federal Liberals have “unfortunately” signalled that they intend to keep Bill C-69 – known as the Impact Assessment Act but referred to by critics as the “no pipelines bill” – in place, a bill the Conservative Party pledged to repeal if elected.

“It’s my view that as long as that remains Canadian law, we will never see another pipeline built in this country again, there just seems to be a philosophical difference in terms of how we can move the ball down the field,” he said.

“It’s critically important to grow our oil pipeline capacity to lower our customer concentration risk to the United States, it would put us in such a stronger position but that doesn’t seem to be the case.”