Stocks Closed Sharply Higher Yesterday To Start The Week Stocks closed sharply higher yesterday. The small-cap Russell 2000 led the gains with 2.55%, followed by the mid-cap S&P 400 with 2.49%, and the Nasdaq with 2.27%. The S&P 500 rallied 1.76%, while the Dow was up 1.42%. The markets picked up where last week left off. And the week is off to an auspicious start. Last week, people were already starting to feel better about the upcoming tariffs due on April 2. That's because the Trump administration has already delayed them several times already. And also because of what U.S. Treasury Secretary Scott Bessent said last week: "I am optimistic that on April 2, some of the tariffs may not go on because a deal is pre-negotiated, or once countries receive their reciprocal tariff number, right after that, they will come to us and want to negotiate it down." Interestingly, it was also reported last week that the EU will delay imposing their first round of retaliatory tariffs against the U.S. until mid-April, rather than April 2. No doubt, waiting to see what the U.S. does, given their previous delays, and the negotiations taking place. What is becoming clear is that the tariffs don't appear to be the endgame, but instead a means to an end, which ultimately is fair trade (and freer trade). In other news, yesterday's Chicago Fed National Activity Index increased to 0.18 vs. last month's -0.08. The 3-month moving average rose to 0.15 vs. last month's 0.07. And the PMI Composite report showed the Index ticking up to 53.5 vs. last month's 51.6. The Manufacturing Index came in at 49.8 vs. last month's 52.7 and views for 51.8, while the Services Index came in at 54.3 vs. last month's 51.0 and estimates for 51.2. Today we'll get the Case-Shiller Home Price Index, the FHFA House Price Index, New Home Sales, Consumer Confidence, and the Richmond Fed Manufacturing Index. Next week is a big week for consequential events: the tariff announcements on April 2nd, and Friday's Employment Situation Report on April 4th. In the meantime, we have a potential market moving report out this Friday (March 28th) with the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge). The latest inflation reports on the CPI (retail inflation) and PPI (wholesale inflation) both showed progress on inflation has resumed. In fact, the core rate (ex-food & energy) fell two-tenths of a percent for each. That also mirrored the previous PCE report's two-tenths of a percent drop. Friday's look at the PCE index is not expected to see another downtick. The headline rate is expected to stay flat at 2.5% y/y, while the core rate is expected to tick up to 2.7% vs. last month's 2.6%. Nonetheless, the horizontal move to slight uptick does not appear to be causing much concern. Especially after last week's FOMC Announcement where the Fed forecast PCE inflation for 2025 to end at 2.7%. Prior to that, the market will be looking forward to GDPNow's Q1'25 GDP update on Wednesday, March 26th. You'll remember, the sudden downshift from their estimate of 2.3% to -1.8%, roiled the market with calls for a recession. The Fed seemed to tamp those concerns down when they forecast full-year 2025 GDP at 1.7%, with 2026 at 1.8%. Nonetheless, all eyes will be on Wednesday's update to see if that outlook improves. Until then, we'll see if the market can build upon yesterday's gains. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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