Today was another volatile day for stock investors as the major indices — the Nasdaq 100 (QQQ), the S&P 500 (SPY), and the Dow Jones Industrial Average (DIA) — finished today’s trading mixed amid more tariff chaos. This led to significantly higher than usual volumes across all three ETFs, with the SPY seeing the highest at around 251 million shares traded. For reference, the average is 60.67 million. Furthermore, the real estate sector (XLRE) was the biggest loser, while the technology sector (XLK) was the leader.
Separately, Federal Reserve Governor Adriana Kugler said today that part of the recent jump in prices for goods and services may be due to people and businesses reacting early to President Trump’s new tariffs. Speaking to students at Harvard, she stressed that the Fed’s top priority is keeping inflation in check and sticking to its 2% goal. While Kugler didn’t comment directly on Trump’s policies, she did talk about the real concerns families have about higher prices for everyday items like eggs and clothes — and said that is why the Fed needs to stay focused on controlling inflation.
She also noted that the economy might have been stronger than expected in the first quarter because people rushed to buy things like cars before the tariffs took effect. Still, it is too early to know how the Fed should respond to the situation. Chair Jerome Powell has said that the tariffs could lead to both higher prices and slower growth, but the Fed needs more time before making any decisions. Trump’s threats to increase tariffs on China have only added more uncertainty to the outlook.
Interestingly, though, some signals in the market suggest that a recession might not be as likely as feared. According to analysts at Société Générale, high-yield credit spreads are currently below 4%, which historically points to a 0% chance of a recession. However, other measures vary, as the VIX shows an 81% chance, short-term interest rates suggest a 52% chance, and manufacturing data points to a 41% chance. Although some data models suggest a low recession risk, analysts warn that if a slowdown does happen, the credit market may be the least prepared to handle it.