April 23 Market Overview

Happy Wednesday.

The market pushed higher again, which was nice to see - that big morning jump faded a bit.

Two main things seemed to be on everyone's mind: signs the White House might ease up on China tariffs, and Trump taking Fed Chair Powell off the chopping block.

I’m sending over my book on swing trading to anyone who genuinely check’s out today’s sponsor (Yes, I have metrics on who clicks through 🙂)

Let's dig in...

Executive Summary

• Trump signals China tariffs will be “substantially” reduced from 145% level, with WSJ reporting potential cuts to 50-65% range
  

• President declares “no intention” of firing Fed Chair Powell, eliminating a key uncertainty that had rattled markets
  

• White House clarifies any tariff reductions must be bilateral, tempering initial market enthusiasm
  

• Economic data shows business outlook deteriorating to post-pandemic lows amid ongoing trade uncertainty
  

Market Overview

Key Market Drivers

1. Trade De-escalation Path Emerges: Trump stated China tariffs “will come down substantially” while Treasury Secretary Bessent noted opportunity for a “big deal” where “America First does not mean America alone.” The Wall Street Journal reported administration considering tariff reductions to 50-65% range, requiring reciprocal action from Beijing.
   

2. China’s Calculated Response: Foreign Ministry spokesperson stated “if we talk, the door is wide open,” while cautioning they would not negotiate under pressure, setting conditions for potential discussions while maintaining leverage.
   

3. Powell Position Secured: Trump’s reversal on Fed Chair follows weeks of harsh criticism, including recent statement that Powell’s “termination cannot come fast enough.” The certainty removed a significant overhang from markets.
   

4. Economic Warning Signs: Flash PMI data showed manufacturing activity edging higher while services slowed more than expected. Respondents specifically noted tariff inflationary effects, with business expectations about the year ahead falling to some of the lowest levels registered post-pandemic.
   

Stock Spotlight

Tesla ($TSLA ( ▲ 9.8% )) shares jumped despite Q1 automotive revenue falling to $12.9B, its worst in four years. CEO Musk announced his DOGE time commitment will decrease starting May.

Boeing ($BA ( ▲ 0.96% )) narrowed its Q1 loss to $31M from $355M last year. CEO Ortberg threatened to stop China jet production after Chinese airlines returned planes due to tariffs.

Intuitive Surgical ($ISRG ( ▲ 1.27% )) beat earnings and revenue expectations. Management warned tariffs would impact margins by 170 basis points in FY25.

Enphase Energy ($ENPH ( ▲ 2.36% )) missed on both earnings and revenue, dragging down solar names. CEO highlighted tariffs will cause a 2% margin reduction in Q2 for its China-sourced battery business.

Duolingo ($DUOL ( ▲ 1.82% )) received an outperform rating from Morgan Stanley with a $435 price target, citing its gamified approach to language learning.

Big Name Updates

Apple ($AAPL ( ▲ 0.44% )) and Nvidia ($NVDA ( ▲ 4.3% )) led tech gains. Apple benefits from potential relief on China manufacturing tariffs, while Nvidia investors hope for H20 export ban reconsideration.

Amazon ($AMZN ( ▲ 1.31% )) and Meta ($META ( ▲ 2.65% )) moved higher on expectations that reduced tariffs would boost SMB ad spending. Both companies were fined €700M by the EU for tech rule violations.

Alphabet ($GOOGL ( ▲ 1.68% )) is exploring India-based Pixel phone manufacturing to avoid 46% tariffs on Vietnamese production.

AT&T ($T ( ▼ 2.62% )) gained after reaffirming its full-year earnings guidance range of $1.97-$2.07 per share.

Other Notable Company News

Tempus ($TEM ( ▼ 1.12% )) signed deals with AstraZeneca ($AZN ( ▲ 0.03% )) and Pathos for a $200M oncology AI model development.

Shopify ($SHOP ( ▲ 2.1% )) saw KeyBanc lower its price target to $105 from $140 on tariff headwind concerns.

Krispy Kreme ($DNUT ( ▲ 0.7% )) announced board refreshment, nominating former Kraft Heinz and Starbucks executives.

Intel ($INTC ( ▼ 6.7% )) unveiled a new auto chip and partnerships at the Shanghai Auto Show.

Oklo ($OKLO ( ▼ 2.39% )) announced Sam Altman will step down as Chairman, potentially enabling OpenAI customer engagement.

RTX Corporation ($RTX ( ▲ 2.67% )) was upgraded to Overweight by Morgan Stanley, which called yesterday's sell-off "overdone."

Oracle ($ORCL ( ▲ 0.71% )) was downgraded to Neutral by Piper Sandler, citing FY2026 investment expectations.

Sector Watch

Bond Market

• Yield Movement: Treasury yields moderated with the 10-year settling around 4.385%

• Market Signal: Despite equity strength, modest yield decline suggests persistent growth concerns

• Bullish View: BMO Capital Markets noted investor pessimism may be unjustified, recommending traders "maintain their discipline and stay the course"

• Bearish View: BCA Research maintains a defensive stance, highlighting deteriorating U.S. economic indicators and arguing that "recession risks remain underpriced"

Policy Watch

• Treasury Position: Bessent emphasized "large U.S. trade deficits cannot persist" while suggesting opportunity for a "big deal" through mutual economic rebalancing

• Tariff Conditions: Both Treasury Secretary and White House clarified any tariff reductions would be bilateral, not unilateral - "China needs to make a deal with the United States"

• Fed Outlook: Governor Kugler expects to hold rates steady while tariff-related inflation risks persist, though monetary policy is "well positioned for changes in the macroeconomic environment"

• Trade Front-Running: EU data showed exports to U.S. jumped 22.4% in February, hitting €51.8B—fastest growth in over a year—suggesting Americans may be accelerating European purchases before tariffs hitn.
  
  

What to Watch

1. China’s Official Response:

   • China Foreign Ministry statement suggests openness but unwillingness to negotiate under pressure

   • Markets will react strongly to any concrete proposals from Beijing

   • Watch for comments from China’s Commerce Ministry, which handles trade policy details
     

2. Supply Chain Shifts:

   • Companies accelerating production relocation, like Google’s reported India manufacturing plans

   • Boeing’s threat to stop China-bound production signals potential widespread supply disruptions

   • Sector-specific impacts will vary dramatically based on China exposure
     

3. Earnings Tariff Commentary:

   • Companies quantifying tariff impacts provide best visibility into real economic effects

   • Intuitive Surgical (170bps) and Enphase (200bps) have specified margin hits

   • Divergent impacts emerging across sectors - manufacturing benefiting while tech/consumer suffering
     

4. Fed Reaction Function:

   • Powell’s job security removes one uncertainty, but tariff-driven inflation remains a concern

   • Watch for updated Fed commentary on trade policy impact on monetary decisions

   • Markets currently underpricing potential interest rate volatility from trade-induced inflation

P.S. 

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Thanks for reading 🙂

- John