Stocks Closed Sharply Lower On Friday And For The Week On Tariff Uncertainty Stocks closed sharply lower on Friday and for the week. The S&P, in just 2 days, fell by -10.5%, while the Nasdaq dropped by -11.4%. Fallout from last Wednesday's tariffs announcement have sent stocks reeling. Ironically, the announcement created more questions than answers. That includes what happens if other countries remove their tariffs? Will the 10% minimum tariff still stand or will that be removed so both countries are at zero? How long will these tariffs last? And also, how much of those tariffs will companies pass on to customers? That's probably the biggest question right now. For perspective, it's important to know that imports make up only about 15% of U.S. GDP. Moreover, it's highly unlikely that there will be a commensurate decrease in spending in relation to the tariffs. It's also unlikely that all of the tariffs will result in pass-through price increases. Additionally, there's the substitution effect of people simply switching to domestic products. That would be considered a benefit. Judging by the reaction of the markets, some investors are shooting first and waiting for the answers later. News that China will retaliate with the imposition of an additional 34% tariff, underscored fears of a trade war between the two largest economies. The EU vowed countermeasures as well. Although, some countries have pledged to remove their tariffs altogether. Vietnam is one. Israel, prior the announcement, has said they will do the same. India is looking to cut their tariffs. And other countries have already phoned the White House hoping to negotiate better delas. How this shakes out will be the main focus in the coming weeks and months. Lost in Friday's tariff news and market rout, was a better-than-expected Employment Situation report. Nonfarm payrolls gained 228,000 new jobs in March (209K in the private sector and 19K in the public sector) vs. the consensus for 131,000 (115K private, 16K public). The unemployment rate increased to 4.2%, up slightly from last month's 4.1%, but in line with expectations. Wage growth was up 0.3% m/m vs. last month's 0.2% pace, but in line with estimates. On a y/y basis, it eased to 3.8% vs. last year's 4.0% and views for the same. Additionally, January was revised down by -14,000 to 111K from 125K, and February was revised down as well by -34,000 to 117K from 151K. For March, the biggest job gains came from the following industries: Health Care added 54,000 new jobs; Social Assistance jobs were up 24,000; Retail Trade gained 24,000; and Transportation and Warehousing hired 23,000. Fears of recession after GDPNow's negative Q1'25 GDP estimate, and the recently announced tariffs, are countered by a solid jobs market. The amount of jobs being added to the economy are not recessionary. Instead, they are indicative of growth. Last week's fall has put all of the major indexes back in correction territory, with some in new bear territory. As painful as corrections are, they are very common. Every bull market has them. Likewise, bear markets come and go as well. But the moves back up are spectacular. Literally every previous bear market has resulted in a new bull market. And when this correction/bear market is done (it may be closer than you think after last week), I'm expecting a huge move up. In the meantime, the markets will see if they can stabilize after last week's drubbing. And after what could very well have been an overreaction, there's the potential for big upside surprises. So be on the lookout. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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