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April 7, 2025
Dow: 37,646
S&P: 5018
Nasdaq: 15,464
10-YR T-Note: 4.11%
Bitcoin: 77,238
VIX: 48.88
Gold: $3,042
Crude Oil: 60.40
Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.
As I said the day before, Friday’s historic downside disaster proved once again that my observation about the market’s reaction to the latest Trump tariff program was certainly a “Liberation Day” in the sense that the market certainly “liberated” investor money from investor’s pockets.
The worst crisis since COVID slammed into a higher gear as the S&P lost 6% after China matched Trumps’ big rise in tariffs announced earlier this week. The move increased the stakes in a trade war that could end with a recession that hurts everyone. Not even a better than expected report on the U.S. job market, which is usually the economic highlight of each month, was enough to stop the slide.
The drop closed the worst week for the S&P since March 2020, when the pandemic ripped through the global economy. The Dow plunged 2,231 points, or 5.5% and the Nasdaq composite tumbled 5.8% to fall more than 20% below its record set in December.
So far there have been few, if any, winners in financial markets from the trade war. Stocks for all but 14 of the 500 companies within the S&P index fell on Friday. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries the trade war will weaken the global economy.
China’s response to U.S. tariffs caused an immediate acceleration of losses in markets worldwide. The Commerce Ministry in Beijing said it would respond to the 34% tariffs imposed by the U.S. on imports from China with its own 34% tariff on imports of all U.S. products beginning April 10. The United States and China are the world’s two largest economies.
Markets briefly recovered some of their losses after the release of Friday morning’s U.S. jobs report, which said employers accelerated their hiring by more last month than economists expected. It is the latest signal that the U.S. job market has remained relatively solid through the start of 2025, and it has been a linchpin keeping the U.S. economy out of a recession.
But that jobs data was backward looking, and the fear hitting financial markets is about what is to come.
The central question looking ahead is: Will the trade war cause a global recession? If it does, stock prices may need to come down even more than they have already. The S&P is down 17.4% from its record set in February.
Trump seemed unfazed, as from Mar-a-Lago, his private club in Florida, he headed to his golf course a few miles away after writing on social media that “THIS IS A GREAT TIME TO GET RICH.”
The Federal Reserve could cushion the blow of tariffs on the economy by cutting interest rates, which can encourage companies and households to borrow and spend. But the Fed may have less freedom to move than it would like.
Fed Chair Jerome Powell said Friday that tariffs could drive up expectations for inflation. That could prove more damaging than high inflation itself, because it can drive a vicious cycle of behavior that only worsens inflation. U.S. households have already said that they are bracing for sharp increases to their bills.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.
That could indicate a hesitance to cut rates because lower rates can give inflation more fuel.
Much will depend on how long Trump’s tariffs stick and what kind of retaliations other countries deliver. Some are holding onto hope that Trump will lower the tariffs after prying “wins” from other countries following negotiations.
Trump has given mixed signals on that. On Friday, he said Vietnam “wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S.” Trump also criticized China’s retaliation, saying on his Truth Social platform that “CHINA PLAYED IT WRONG, THEY PANICKED - THE ONE THING THEY CANNOT AFFORD TO DO!”
Trump has said Americans may feel “some pain” because of tariffs, but he has also said the long-term goals, including getting more manufacturing jobs back to the United States, are worth it. On Thursday, he likened the situation to a medical operation, where the U.S. economy is the patient.
“For investors looking at their portfolios, it could have felt like an operation performed without anesthesia,” said one market commentator.
But this person also said the next surprise for investors could be how quickly tariffs get negotiated down. “The speed of recovery will depend on how, and how quickly, officials negotiate,” he said.
