S&P500
Market update on April 7.
Snapshot of the US major stock indices on Friday:* Dow -5.5%* NASDAQ -5.8%* S&P 500 -6%
S&P 500 is trading at 5,074 within a daily range of 4,700 to 5,700.
On Monday morning, during electronic trading, the S&P 500 index (SPX) sharply fell again to 4,890, meaning a further decline of about 3.5% from Friday's closing.
Thus, as of the morning of April 7, the main US market index has slumped by 20% from the high of February 1, 2025. This is what can happen in such a short period due to Trump's thoughtless actions. The US market capitalization has lost at least $7 trillion as of April 7.
The benchmark stock indices incurred heavy losses for the second consecutive session on volumes above average.
The Nasdaq Composite (-5.8%) entered a bear market, dropping more than 20% from its all-time high. The S&P 500 fell by 6.0%, and the Dow Jones Industrial Average dropped by over 2,000 points.
China responded to US tariffs with its own 34% tariff on imports from the US, further intensifying the trade war and reducing hopes for a quick easing of tensions. As a result, concerns about a global slowdown have resurfaced, leading to a risk-off sentiment in a broad market retracement.
Oil prices plunged by 7.5% to $62.02 per barrel. Treasury yields fell (2-year yields down by 5 basis points to 3.67%, 10-year yields down by 7 basis points to 3.99%). On top of that, the CBOE volatility index (VIX) rose above 45.0.
The trade war and fears of a slowdown overshadowed today's economic data, although non-farm payrolls rose by 228,000 in March, stronger than the consensus of 130,000. To be fair, downward revisions for January and February somewhat dampened the shine of this report.
The market was not calmed by comments from Fed Chairman Jerome Powell, who indicated that he doesn't seem overly concerned about the recent market volatility. He acknowledged that the tariffs were higher than expected, which would provide a stronger headwind for growth, but he also stated that the FOMC would patiently wait for more clarity before making any adjustments to monetary policy.
All 11 sectors of the S&P 500 dropped by more than 2.5%, with energy at the bottom of the list, falling 8.7% compared to the previous day. The next worst-performing sectors were financials (-7.4%) and technology (-6.3%).
Year-to-date:
* Dow Jones Industrial Average -9.9%* S&P 500 -13.7%* S&P Midcap 400 -15.1%* Russell 2000 -18.1%* Nasdaq Composite -19.3%
Disclaimer: As mentioned earlier in the text, the market nosedive on Monday could be bigger by around 3%.
Economic calendar on Friday:
* Non-farm payrolls for March: 228K (consensus 130K); previous was revised down from 151K to 117K
* Private non-farm jobs for March: 209K (consensus 120K); previous was revised down from 140K to 116K
* Average hourly earnings for March: 0.3% (consensus 0.3%); previous was revised down from 0.3% to 0.2%
* Unemployment rate for March: 4.2% (consensus 4.1%); previous 4.1%
* Average workweek for March: 34.2 (consensus 34.2); previous revised from 34.1 to 34.2
The main takeaway from the report is that positive results for March were somewhat offset by downward revisions for January and February, so the report is unlikely to change the Fed's view on the current state of the labor market.
Looking ahead to Monday, market participants will get to know:
* February consumer credit (consensus $15.1 billion; previous $18.1 billion) at 3:00 PM Eastern Time on Monday.
Energy market Brent oil is trading at $63.80. Oil prices fell sharply. Apart from the US stock market crash, oil is under pressure from OPEC+'s decision to increase oil supplies by 0.4 million barrels per day, which is considerably higher than the forecasted 0.16 million barrels increase.
Conclusion The US market has experienced a 20% slump in the benchmark indices. In major crises, the stock market typically acts as a leading indicator before the economy enters a recession. This was the case in 2008 when the stock market started falling in October 2007, but the recession didn't appear until March 2008. Thus, a recession is quite possible as early as Q2 2025. However, every major crisis has its own peculiarities. In the current case, the US economy is still on a sound footing. The market crash is essentially orchestrated artificially by Trump and his team with these highly questionable tariff actions. No surprise, the retaliatory tariffs are being imposed primarily by China. Nevertheless, there is still the possibility of large cancellations and tariff cuts, which could enable the market to gain ground. Or perhaps not. In any case, the investor's rule is to buy without using leverage. Current market quotes are excellent for purchasing now. In a few years, these prices will be legendary. So, buy and hold the S&P 500 index (SPX).
