Stocks Closed Sharply Higher Yesterday, Erasing Monday's Decline Stocks closed sharply higher yesterday, undoing Monday's drop. Tariff uncertainty continues. Although, we are likely to get some clarity on the status of trade negotiations soon. In yesterday's White House press briefing, it was noted that the trade negotiation team, which includes Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick (amongst others) are meeting with 34 countries this week. It was also revealed that the administration has received 18 trade proposals "on paper," so far. In other news, it was reported that Mr. Bessent, in a private investor summit hosted by JPMorgan Chase, said he expects "there will be de-escalation" in the trade war with China "in the very near future." He went on to say that with tariffs at their current levels, "no one thinks the current status quo is sustainable." Additionally, he said that the prospect of de-escalation "should give the world, the markets, a sigh of relief." Clearly, the world, or at least the markets, took that to heart and rallied. As more good news on tariffs trickles in, that should further buoy prices. And since the market often acts on expectations, then the prospect of soon-to-be-announced deals, and trade with China returning to something closer to normal, should continue to underpin stocks in anticipation of this. Yesterday's Richmond Fed Manufacturing Index declined to -13.0 vs. last month's -4.0 and views for -5.0. Today we'll get MBA Mortgage Applications, the PMI Composite report, New Home Sales, the Atlanta Fed Business Inflation Expectations, and the Beige Book. We'll also hear from Fed policymakers Austan Goolsbee, Christopher Waller, Alberto Musalem, and Beth Hammack as they speak at their respective engagements throughout the day. After the close yesterday, Tesla reported a negative EPS surprise of -38.6%, and a negative sales surprise of -7.84%. That translated to a quarterly EPS growth rate of -40.0% vs. this time last year, and a sales growth of -9.20%. TSLA was up 4.60% in the regular session before earnings, and was up roughly 1% in after-hours trade following earnings. TSLA has had their share of challenges, which includes the recent politicization of their brand due to Elon Musk's DOGE efforts. But there are also legitimate business concerns regarding tariff uncertainty and the ongoing trade war with China. Interestingly, Netflix reported earnings last Thursday. They posted a positive EPS surprise of 16.2%, and a negative sales surprise of -0.04%. However, that equated to a quarterly EPS growth rate of 25.2% vs. this time last year, and a sales growth of 12.5%. Since reporting, NFLX was up 1.53% on Monday, and 5.31% yesterday (Tuesday). In spite of the ongoing tariff concerns, NFLX is not expected to be directly impacted by them. And they have since made new all-time highs following their earnings report. We'll get more earnings today with 186 companies on deck, including AT&T, Boeing and NextEra Energy before the open, along with IBM, ServiceNow and Texas Instruments after the close. Stocks are now in the plus column for the week. There's still 3 more days to go. But after a rough start on Monday, yesterday's surge could mark the beginning of a momentum shift to the upside. If stocks can build on yesterday's gains today, that would be another encouraging sign. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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