Stocks Closed Sharply Lower Yesterday After Tariffs Announcement, Employment Report On Tap For This Morning Stocks closed sharply lower yesterday after Wednesday afternoon's tariffs announcement. The markets suffered their biggest losses since the pandemic. The Dow was down -3.98%, the S&P 500 was down -4.84%, and the Nasdaq was down -5.97%. The small-cap Russell 2000 fell by -6.59%, and the mid-cap S&P 400 was lower by -6.66%. To recap Wednesday's announcement, the Administration is placing a 25% tariff on all foreign made autos, and discounted reciprocal tariffs on countries (which amounts to roughly half of what each respective country imposes on the U.S.). That effectively puts a 34% tariff on China, 24% on Japan, and a 20% tariff on the EU. Less for other countries. But there's also a 10% minimum tariff. Some countries have responded. Others say they will soon. In the meantime, there's still plenty of uncertainty around the rollout (not all went into effect yesterday), and how open the White House is to negotiation. For example, if countries remove all of their tariffs and restrictions on our goods, would we remove all of our tariffs on them, including the 10% minimum tariff? For now, plenty of investors seem to be selling first and asking questions later. We've got another busy day on tap for today with the Employment Situation report by the Bureau of Labor Statistics (BLS). Last month's (February) unemployment rate came in at 4.1%, with 151,000 new jobs being created. This month's report is expected to show the unemployment rate at 4.2%, with 131,000 new jobs being created (115K in the private sector and 16K in the public). One of the big questions for this report will be the potential influence of fired government workers. Last month's report only showed -10,000 job declines by the Federal Government. A smaller number than feared given all of the talk of government worker layoffs. Although, the February report only included a portion of the first half of the month. The additional layoff announcements in the back half of the month, not to mention the first half of March, are likely to show up in this morning's numbers. Interestingly, Wednesday's ADP Employment report showed 155,000 new private payroll jobs were created in March. That report got little attention given the tariff news. But that was a robust number with a positive surprise. Granted, the ADP report has a spotty track record of forecasting what the BLS report will show. Nonetheless, it was a solid report.
We'll also hear from Fed Chair Jerome Powell today when he speaks before the Society of Advancing Business Editing and Writing Annual Conference in Arlington, Virginia. With yesterday's drubbing, the markets are currently all down for the week. And they are essentially all back in correction territory once again. The Dow is down -9.93% from their recent all-time high close. Although, technically, that's only pullback territory, which is defined as a decline between -5% to -9.99%, whereas a correction is defined as a decline between -10% to -19.99%, but it's close enough to a correction. The S&P 500 is down -12.2% (correction); the Nasdaq is down -18% (correction); the Russell 2000 is down -21.8% (technically a bear market); while the S&P 400 is down -18% (correction). But I will say that pullbacks and corrections are common. Every bear market has them. And they are usually accompanied by great panic, if not hysteria. However, they typically turn out to be pauses that refresh before the next leg up. The Employment Situation report comes out at 8:30 AM ET. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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