Tariffs Crash Markets, Investors Look For Support (Weekly Cheat Sheet)

The markets just delivered a painful lesson in how quickly sentiment can shift. I’ve seen many market downturns in my 20+ years as an analyst, but this week’s selloff hit with particular ferocity. President Trump’s “Liberation Day” tariff announcement sent shockwaves through global markets, triggering the worst single-day plunge since early 2020.

Let me break down the damage:

• Dow Jones dropped over 3,200 points (-7.9%), entering correction territory
• Nasdaq plummeted 10%, landing in bear market territory
• S&P 500 slid 9.1% from last Friday

The tech sector took the hardest hit, with Apple, NVIDIA, and Meta all suffering double-digit percentage losses. The S&P 500 information technology sector fell 11.4%, while energy (-15.0%) and financial (-11.4%) sectors followed closely behind.

Although I see the drop in the markets and risk for the economy. President Trump’s tarriff play will most likely help America long term.

My best advice is NOT to buy the hype. Although the chances of recession have gone up, it is reported that Trump’s administration is in talks with countries on tariffs. Vietnam and Taiwan have reportedly offered 0% tariffs. Once countries start to make deals, expect a HUGE jump up.

Did you know? Market corrections (10% drops) have occurred on average about once per year throughout history, while bear markets (20% drops) happen roughly every 3.5 years. While painful, they’re normal parts of market cycles.

As Benjamin Graham once said, “The individual investor should act consistently as an investor and not as a speculator.” This week tested that wisdom as panic spread across trading desks worldwide.

Bond Market & Interest Rates

The market turmoil sent investors rushing to traditional safe havens. Treasury yields dropped significantly as bond prices climbed:

• 10-year yield fell 27 basis points to 3.99%
• 2-year yield decreased 24 basis points to 3.67%

Meanwhile, the CBOE Volatility Index (VIX) – often called Wall Street’s “fear gauge” – spiked above 45, reflecting extreme uncertainty. Historically, when the VIX pierces the 45 mark, the S&P 500 has often shown positive returns in subsequent trading days. I’m watching closely to see if this pattern holds.

For those wondering about potential support levels, I’ve been analyzing scenarios based on earnings and investor sentiment:

• Bull Case: EPS of $270 with a 20x P/E could push the S&P to $5500
• Baseline Case: EPS of $250 with an 18x P/E puts the S&P around $4500
• Bear Case: EPS of $220 with a 16x P/E could drag the index down to $3500

US Markets

The tariff situation dominates headlines, but several other key developments deserve attention:

1. Fed Chair Powell indicated rate cuts are on hold amid tariff concerns, warning that the new trade policies could boost inflation while slowing growth – the dreaded stagflation scenario.
2. March delivered surprisingly strong payroll numbers with 228K jobs added, though unemployment ticked up to 4.2%.
3. Service sector growth slowed sharply with the ISM Services PMI falling to 50.8, while manufacturing contracted with ISM Manufacturing dropping to 49.0.
4. Layoffs surged to 275K in March, reaching the highest level since 2020, with Musk’s DOGE cutting 216K federal jobs.
5. Goldman Sachs doubled its U.S. recession odds to 35%, while the Atlanta Fed’s GDPNow tool predicts a 0.8% contraction in Q1.
6. In corporate news, Rocket Mortgage announced plans to acquire Mr Cooper for $9.4B, and Tesla deliveries plunged 13% amid growing backlash.

Global Markets

International markets faced their own challenges:

1. China retaliated with matching 34% tariffs on all U.S. imports starting April 10, putting $582B in US-China trade at risk.
2. Eurozone inflation approached the ECB’s 2% target, falling to 2.2%, with markets expecting a rate cut at the ECB meeting on April 17.
3. The Reserve Bank of Australia held rates at 4.1%, expressing concern about U.S. tariffs and geopolitical tensions.
4. China’s factory activity hit a one-year high in March with a PMI of 50.5, though tariffs threaten to derail this fragile recovery.
5. France’s Marine Le Pen was barred from office for 5 years following a conviction, reshaping the country’s political landscape.
6. Canada’s services PMI sank to a near 5-year low as tariffs and election uncertainty hammered demand.

Commodities & Crypto Corner

Oil prices collapsed with WTI crude dropping to $64.41 per barrel (-3.79% for the week). Earlier, prices had plunged 6.64% in a single session on demand concerns. Meanwhile, OPEC+ surprised markets by announcing a sharp output hike of 411,000 barrels per day for May.

Gold continues to shine amid the uncertainty, trading around $3,107.75 per ounce. Its safe-haven appeal remains strong with all the inflation concerns, geopolitical tensions, and market volatility. Silver has seen a modest decline to $33.14 per troy ounce but maintains significant year-to-date gains.

Cryptocurrencies couldn’t escape the downdraft either. Bitcoin tumbled toward $91,000 after failing to hold the $100,000 level, representing a 3.6% weekly decline. The selloff sparked massive liquidations totaling $467 million in the Bitcoin market alone.

Key Events & Calendar

Next week brings crucial inflation data and the start of Q1 earnings season:

• Monday (April 7): Earnings from Levi Strauss and Dave & Buster’s
• Tuesday (April 8): Tilray Brands and RPM International report
• Wednesday (April 9): Delta Air Lines earnings, Constellation Brands
• Thursday (April 10): March CPI report, CarMax earnings
• Friday (April 11): Major financials report, including JPMorgan Chase, Wells Fargo, Morgan Stanley, and BlackRock

I’ll be watching closely to see if markets have found their bottom or if more pain lies ahead. My advice? Don’t make rash decisions during volatile periods. Instead, reassess your risk tolerance and time horizon. The investors who weather these storms typically follow disciplined strategies rather than reacting to every headline.