April 2nd Market Overview

Happy Wednesday.

Markets pulled off quite the reversal today ahead of the 4 p.m. tariff talk reveal. After watching the early weakness, seeing buyers step in this afternoon suggests maybe some bad news was already priced in – and the strong ADP report certainly didn't hurt sentiment.

But make no mistake, the details unveiled shortly – rates, targets, timing – are what really matter now.

Let's dig in...

Executive Summary

• Tariff Showdown: President Trump set to detail sweeping reciprocal tariffs at 4 p.m. ET, with the White House confirming immediate implementation
  

• Market Reversal: Major indices recovered from early 1%+ declines to finish in positive territory, with small caps outperforming large caps
  

• Economic Resilience: ADP reported 155,000 private sector jobs added in March, substantially exceeding the 120,000 forecast
  

• Treasury Insight: Secretary Bessent indicated today’s announced tariff rates will function as maximum “caps” that could be reduced through negotiations
  

Market Overview

Key Market Drivers

1. Tariff Implementation Details: Reports suggest the White House may adopt a three-tiered approach (10%, 15%, 20%) that varies by both country and industry rather than blanket rates. Treasury Secretary Bessent told lawmakers that announced rates will serve as “caps,” giving countries opportunities to negotiate lower duties.
   

2. Labor Market Strength: March ADP private payrolls grew by 155,000 jobs versus 120,000 expected, with February’s figure revised upward from 77,000 to 85,000. However, the wage premium for changing jobs fell to just 1.9% (6.5% for job-changers vs. 4.5% for job-stayers), its lowest level since tracking began in 2020.
   

3. Deteriorating Corporate Sentiment: Surveys highlighted by Apollo’s chief economist Torsten Slok show declining confidence among CEOs and CFOs regarding both the US economic outlook and their own firms’ prospects.
   

4. Global Manufacturing Concerns: JPMorgan economists cautioned that US trade actions could slow the global manufacturing expansion seen earlier this year, noting PMI surveys hint at fading front-loading activity as tariffs began implementation last month.
   

Stock Spotlight

Tesla ($TSLA ( ▲ 0.63% ) ) executed a significant turnaround, initially falling after reporting Q1 deliveries of 336,681 vehicles (well below consensus estimates of 390,343) before rallying on a Politico report that CEO Elon Musk may soon exit his Department of Government Efficiency role.

Amazon ($AMZN ( ▼ 1.38% ) ) gained following New York Times reports of a “last-minute bid” for TikTok ahead of the April 5 divestment deadline, potentially marking an unexpected entry into social media.

Newsmax ($NMAX ( ▲ 0.54% )) experienced extreme volatility, plunging after soaring over 1,000% since its IPO last Friday at $10 per share.

Rivian Automotive ($RIVN ( ▼ 1.0% )) fell after reporting Q1 deliveries of 8,640 vehicles. While exceeding estimates of 8,200, this represents a 36% year-over-year decline from the 13,588 vehicles delivered in Q1 2024.

nCino ($NCNO ( ▲ 1.52% )) declined following weaker-than-expected Q4 earnings of 12 cents per share (versus 19 cents FactSet estimate) and soft guidance, though KBW analysts called the premarket selloff “overdone.”

Big Name Updates

Wedbush analyst Dan Ives described Tesla’s situation as a “full-blown crisis” that is “primarily self-inflicted,” noting Musk “needs to get his act together or else unfortunately darker times are ahead” for $TSLA, which remains down significantly year-to-date.

AppLovin ($APP ( ▲ 3.98% )) reportedly joined Amazon in the TikTok bidding race, according to CNBC. The NY Times noted some parties involved in talks “do not appear to be taking Amazon’s bid seriously” despite the looming April 5 deadline.

Homebuilders including D.R. Horton ($DHI ( ▼ 1.0% )), Lennar ($LEN ( ▼ 0.93% )) faced pressure as Morgan Stanley warned tariffs could drive up fabricated metal product costs by 49%, potentially increasing home prices by 5% in 2025 versus their original forecast of a 2% decline.

ServiceNow ($NOW ( ▲ 2.09% )) saw Stifel reduce its price target to $950 from $1,175, citing near-term risk from DOGE/Tariffs potentially impacting purchasing decisions, while maintaining a Buy rating based on confidence in long-term growth prospects.

Other Notable Company News

Biotech ETFs - The iShares Biotechnology ETF ($IBB ( ▼ 0.37% ) ) and SPDR S&P Biotech ETF ($XBI ( 0.0% )) hit 15-month lows early before recovering.

Petco Health and Wellness ($WOOF ( ▼ 6.71% )) gained after an SEC filing revealed CEO Joel Anderson purchased nearly 1.6 million shares.

CoreWeave ($CRWV ( ▼ 6.49% ) ) continued its post-IPO momentum, rising for a second consecutive session after Tuesday’s gain as investors positioned in newly listed AI infrastructure plays.

BlackBerry ($BB ( 0.0% ) ) fell after forecasting full-year revenue between $504-534 million, below last year’s $534.9 million, with weakness stemming from reduced corporate and government cybersecurity spending.

Paramount Global ($PARA ( ▲ 1.59% )) faced pressure after Deutsche Bank downgraded the media company to Hold from Buy, lowering its price target to $12 from $15 citing declining EBITDA forecasts.

Circle filed for an IPO on the New York Stock Exchange under ticker $CRCL ( 0.0% ), with JPMorgan ($JPM ( ▼ 0.68% )) as lead underwriters. The $USDC.X ( ▲ 0.0% ) stablecoin issuer’s move comes amid industry optimism about potential US stablecoin legislation.

Sector Watch

Bond Market

10-year Treasury yield rose 5 basis points to 4.21%, moving off six-month lows. US Dollar Index fell 0.5%, extending a 3.6% two-day decline. Gold traded near record highs. These moves reflect two competing market concerns: inflation risk from tariffs versus economic slowdown potential.

Policy Watch

Tariff Implementation - Commerce Department added 25% tariffs on beer and empty aluminum cans effective midnight Friday. White House branded the broader rollout "Make America Wealthy Again."

Senate Division - Today's vote targets Trump's "national security emergency" declaration on Canada tariffs. Senator Kaine (D-Va.) indicated McConnell (R-Ky.), Murkowski (R-Alaska), Collins (R-Me.) and Paul (R-Ky.) plan to support the Democratic-led resolution, prompting Trump's criticism on Truth Social.

International Responses - Canada's Carney stated readiness to retaliate against tariffs. Mexico's Sheinbaum rejected reciprocal measures, stating "We do not believe in an eye-for-an-eye."

Pharma Impact - Analysts view Eli Lilly ($LLY ( ▲ 0.38% )), Bristol Myers ($BMY ( ▼ 2.61% )), as better positioned than Novartis ($NVS ( ▲ 0.43% ) ) and Roche ($RHHBY ( ▲ 0.6% )) due to larger US manufacturing footprints.

What to Watch

1. Trump's Tariff Announcement: 4pm ET Rose Garden address.

   • Tiered rates vs blanket tariffs

   • Immediate trading partner responses

   • Negotiations timeline (Barclays: 3-6 months)
     

2. TikTok Deadline (April 5): Amazon and AppLovin among bidders.

   • Resolution impacts US-China tech relations

   • Potential new social media competitive landscape
     

3. Jobs Report (Friday): BLS data follows strong ADP numbers.

   • Forecast: 160,000 jobs added

   • Wage growth as inflation indicator

   • Labor resilience amid trade uncertainty

P.S. 

Please fuel my coffee pot with a quick click to our sponsor today.

Thanks for reading 🙂

- John