Today was another painful day for stock investors. Indeed, the Nasdaq 100 (QQQ), the S&P 500 (SPY), and the Dow Jones Industrial Average (DIA) finished today’s trading session in the red following China’s tariff retaliation. This led to significantly higher than usual volumes across all three ETFs, with the SPY seeing the highest at around 208 million shares traded. For reference, the average is 56.75 million. Interestingly, the energy sector (XLE) was the biggest loser, while the consumer staples sector (XLP) was down the least.
However, the U.S. economy added 228,000 jobs in March, which was much higher than expected. This shows that hiring remained strong even as the unemployment rate ticked up slightly to 4.2%. Wages also rose, with average hourly earnings increasing 0.3% from the prior month and 3.8% from last year. But despite the strong labor data, markets were focused on President Trump’s sweeping tariffs.
Indeed, Federal Reserve Chair Jerome Powell said that these new tariffs, which were much larger than expected, are likely to raise inflation and slow growth. He noted that while inflation caused by tariffs was previously seen as temporary, it may now be more long-lasting. Powell made it clear the Fed isn’t rushing to cut interest rates since there is too much uncertainty to make a move right now. Meanwhile, President Trump called on Powell to slash rates, saying, “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Despite strong job numbers, economists are now predicting higher inflation and weaker growth ahead due to the tariffs. Some are even warning of a possible recession. In addition, market expectations have shifted, with many traders now betting that the Fed will make up to four rate cuts this year. But Powell and other Fed officials are warning that inflation could rise if they act too soon. As of now, the Fed is holding steady, waiting for more clarity before making any decisions.