Calm Before the Tariff Storm

Good morning. U.S. equities closed out a tough March with a modest rebound on Monday, reversing early losses as investors looked ahead to the high-stakes April 2 tariff announcement. While the S&P 500 and Dow ended in positive territory, the Nasdaq remained under pressure, reflecting ongoing weakness in technology and growth sectors. After weeks of elevated volatility, investors appear cautiously optimistic that this week’s key events—including new trade policies and a full slate of labor market data—could help clarify the policy backdrop and bring some stability.

Bond yields fell on Monday, with the 10-year Treasury closing near 4.22%, as softer inflation expectations and safe-haven demand continue to anchor yields. Meanwhile, gold hit yet another record, and oil prices surged as geopolitical risk escalated over the weekend. Despite the noise, recent economic data still point to a resilient consumer and healthy labor market. This morning’s JOLTS report and ISM manufacturing reading will give us the next clues on the state of the economy. With Q1 now in the rearview mirror, attention shifts to how markets digest the new quarter’s macro, earnings, and policy catalysts.

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Stocks reversed early losses to finish mixed on Monday as investors weighed tariff policy speculation, rising commodity prices, and continued concerns around big tech valuations. The S&P 500 and Dow each finished modestly higher, while the Nasdaq lagged, reflecting ongoing pressure in growth-oriented sectors. The broader market has now shed nearly 9% from February’s highs, but defensive sectors and international equities continue to outperform.

Markets opened the day sharply lower following weekend reports that the April 2 reciprocal-tariff announcement may be more aggressive than previously anticipated. This follows last week’s 25% tariff on all autos not manufactured in the U.S., a policy expected to be implemented in stages. Midday, markets began to recover as investors shifted their focus to improving economic fundamentals and hopes for more targeted rather than broad-based tariff measures.

Defensive sectors such as consumer staples and utilities led gains, while technology and communication services underperformed once again. Energy rallied alongside a surge in oil prices. On the economic front, the March Chicago PMI rose to 47.6, ahead of expectations, and the Dallas Fed Manufacturing Index showed continued contraction at -16.3 but improved slightly from February. Bond yields fell with the 10-year Treasury settling around 4.22%.

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Europe (as of 6:00 AM ET):

We kick off Q2 with a packed calendar. The biggest event is Wednesday’s highly anticipated reciprocal tariff announcement, which could reshape investor expectations for inflation, growth, and Fed policy. Today’s ISM manufacturing and JOLTS data will provide early reads on business conditions and labor demand, with the nonfarm payrolls report due Friday. With uncertainty still high, market volatility is likely to remain elevated—but for long-term investors, earnings and economic resilience may soon reassert themselves as the dominant drivers of performance.