Eric Criscuolo:
Hello, I'm Eric Criscuolo, market strategist at the New York Stock Exchange, and this is Market Storylines. Every week, we are here to keep you up to date on the key trends and events driving global markets. Before we get into the action, I'd like to thank the phenomenal Jay Woods for appearing on last week's episode. If you want to learn about the markets, he's definitely a guy you should be listening to. With that, as we record Thursday morning, let's dive into this week's Market Storylines.
Now, last week, the S&P 500 traded in a daily average range of 7%, including days of 11, 9 and 7%. Those are huge ranges, and Jay did a great job describing the whiplash on those days in the last episode. Compared to those moves, equity started this week in a relatively zen-like trance. On Monday and Tuesday, the intraday ranges were around 1 to 2%. The initial shock from the first tariff announcements had worked their way through the markets. Follow-on measures were not as shocking, and the tariff pauses provided some sense of relief. The tariff announcements at the beginning of the month were like a naval bombardment. The more recent news flow has turned to something more like strafing runs, but the market still lurches in response to them as huge uncertainty remains.
The S&P followed up last Friday's 2% gain by adding almost 1% on Monday. On Tuesday, stocks were down a modest 0.2%. Real estate and utilities were among the leading sectors both days as treasury yields finally started to come down. We'll get to that in a minute, but first, let's get to yesterday, or rather Tuesday night when Nvidia announced their H20 chip would face stricter export controls to China and that the company would take a possibly $5.5 billion charge in the quarter. That started futures lower out of the gate. Then we got a report early Wednesday morning that said China was open to trade talks with the U.S. Sounds great. It wasn't exactly like breaking the Watergate cover-up since we've heard those comments before, but nevertheless, the news helped. S&P futures recouped half their losses early.
Combined with news of a new head trade negotiator for China, the price response showed the market's desire to start seeing off-ramps from this tariff and trade expressway we are flying down. While equities opened lower on Wednesday, it was mainly the tech and semi names that were the drag. The equal weight index was almost flat, but we can't have nice things. In the afternoon, Federal Reserve Chairman Jerome Powell delivered a speech and sat for an interview. His comments, though not really breaking substantially in a new direction, were interpreted as hawkish and stocks started to drop like my Islanders playoff hopes. In the end, the S&P was closed down 2% with tech really getting smoked. The ICE Semiconductor Index was down 4%. Today, Thursday, the S&P 500 opened higher, though the Dow was lower due to a sharp decline in UnitedHealth.
One asset that has seen gains this week are Treasuries. Rates have moved lower from their recent highs, 2-year and 10-year yields have dropped about 20 basis points from Friday. That comes after we heard growing concern about large selling Treasuries by foreign investors and governments after yields shot up. The dollar, however, continues to weaken, especially versus the euro and yen. Last week, the dollar was trading around 1.09 to the euro, but is weakened to around 1.14. The yen also continues to strengthen. It's around 142 yen per dollar right now. Last week at one point it was around 148 yen per dollar.
Now onto some more fundamental topics. Q1 earnings season has begun. For everyone reporting the results from a time we call BT, before tariffs. Though helpful to gauge how strong companies were going into these shocks, the outlook and commentary are by far the most important. Financials dominate the early part of the reporting season, especially the big banks. Overall, they've traded well following their earnings reports. Credit provisions have increased due to the macroeconomic environment, but not at alarming levels. Not surprisingly, these reports are overflowing with words like uncertainty and caution. Some non-financial companies have removed their guidance or even offered dual-track guidance based on things like base and worst-case scenarios. However, most companies so far have maintained guidance despite all of this.
Now, finally, let's look ahead to next week. The market will be closed tomorrow, so enjoy your long weekend. Earnings season will roll on providing the market with more opportunities to hear management's thoughts on the environment and their outlook, especially as we hear from a broader set of companies. That would include industrial and aerospace companies, healthcare, and some of the mega-cap tech names, among a ton more. For macro data, the flash PMIs will be very important as they will incorporate respondents' views during April after the tariffs were announced. Of course, the biggest thing we could hear is some type of path forward for all this trade conflict. I want to thank everyone for spending time with us today. Remember, you could watch Market Storylines on tv.nyse.com or on the NYSE YouTube channel. You can also listen every Friday on the Inside the ICE House podcast feed. Thanks for joining me. I'm Eric Criscuolo. We'll talk to you again soon.
Speaker 2:
That's our conversation for this week. Remember to rate, review and subscribe wherever you listen and follow us on X at Ice House Podcast. From the New York Stock Exchange, we'll talk to you again next week Inside the ICE House. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, expressed or implied, as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell a, solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
