Stocks Closed Lower Yesterday After Strong Intraday Rally Failed, And Higher Tariffs Placed On China Stocks closed lower yesterday after spending much of the day well into the green. But by late afternoon, the intraday gains had disappeared. Tariff uncertainty continues to weigh on stocks. After China levied an additional 34% tariff on the U.S., in response to the 34% tariffs we put on them (which were in response to the lopsided tariffs and restrictions they have imposed on us for years), President Trump gave President Xi until 4/8 to remove the retaliatory tariffs, or he would add an additional 50% tariff onto China. After China missed the deadline, the White House said they would now apply a total tariff of 104% on China. Those tariffs went into effect on Tuesday afternoon. Tariff collection is set to begin today. Other countries have chosen a different tactic to mitigate the new tariffs. Several have already agreed to drop their tariffs to zero. But if other unfair trade barriers exist, the 10% minimums are not likely to come off until that part of the issue is addressed. Nevertheless, Treasury Secretary Scott Bessent has said that he was "highly confident" that they would have "productive negotiations." In other news, yesterday's NFIB Small Business Optimism Index slipped to 97.4 vs. last month's 100.7 and views for 98.9. Today we'll get MBA Mortgage Applications, Wholesale Inventories, and last month's FOMC Minutes. Regarding the minutes, everyone will try and glean some additional insight on what was said and where people's heads are in terms of the Fed's next moves. That includes forecasts of GDP growth, inflation, and the possible timeline for resuming rate cuts. We know they ratcheted down GDP (but still showing solid growth), raised their inflation estimates (albeit only mildly), and kept their forecast for 2 rate cuts this year (presumably by 25 basis points each). We'll see if there's any new information to be shared that helps inform investors. According to the CME's FedWatch tool, the odds for a rate cut in May have finally tilted in favor of a cut with 55.6% expecting a 25 basis point cut vs. 44.6% believing no cut will be seen. That's a month earlier than previous forecasts that suggested nothing until June. We'll see if the Fed gives any indication of a faster pace. But I would note, those minutes are from the meeting that took place on March 19, weeks before the tariff announcement and subsequent market fallout. That comes out at 2:00 PM ET. In the meantime, we'll see if the market can try and get a rally going again. Aside from China playing hardball, it would appear that the tariff levels on many of the other countries could be going down in the coming weeks and months, thru negotiations. Nearly 70 countries have already reached out to the White House for tariff talks. But some will not see any relief, because they refuse to lower their tariffs, or refuse to do away with their non-tariff barriers. The biggest wildcard right now, however, is China. And we'll see what China does after being stuck with their new 104% tariff. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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