Schwab Market Update

Published as of: April 11, 2025, 9:07 a.m. ET

(Friday market open) After a night of sharp overseas losses, U.S. stocks drew nibbles in early trading despite China raising its tariffs on U.S. goods. Beyond the trade war, investors pondered the latest earnings (and warnings) from some of Wall Street's largest banks, along with signs of inflation staying in its lane. The March Producer Price Index (PPI), which tracks wholesale price trends, dove 0.4% in March, well below analysts' expectations for a 0.1% increase.

Earnings season gained traction today with JPMorgan Chase (JPM) keeping up its long string of beating analysts' expectations. Morgan Stanley (MS) also exceeded Wall Street's estimates, and so did Wells Fargo (WFC). Those strong first quarter results, however, came with a dose of caution as bank leaders warned of economic turbulence and took new action to protect their businesses from possible upheaval. The trade situation remains fluid as China announced today it's raising its tariffs on U.S. products to 125%, still not quite at the 145% the U.S. leveled on Chinese goods. This effectively freezes nearly $600 billion in world trade and puts the U.S. technology, agriculture, auto, and other industries out in the cold with the third largest U.S. trading partner.

Tremors continued in the Treasury market and extended to the dollar late this week. The benchmark 10-year note yield topped 4.4% this morning and the dollar index hit a three-year low as investors appeared to unload U.S. assets amid trade uncertainty. Decent demand for Wednesday's 10-year note auction and Thursday's 30-year bond auction had calmed nerves slightly, with more auctions ahead next Monday. Some of the weakness in Treasuries and the dollar could suggest tariff-related inflation worries. This follows the 2022–2023 inflation surge, meaning the Federal Reserve may be extra-hesitant to loosen policy. "For those waiting for the Fed to cut rates, it looks like it will take more time and data," said Kathy Jones, chief fixed income strategist at Schwab.

1. PPI deeper dive: Though the headline PPI drop of 0.4% partially reflected a big drop in volatile energy prices last month, other elements of the report could be more meaningful. The core PPI, which excludes energy and food prices, fell 0.1% last month versus analysts' expectation for a 0.3% rise. And components of PPI that play into Personal Consumption Expenditures (PCE) prices, a report closely watched by the Fed, were mild and "point to a soft PCE print for March," according to Kevin Gordon, director, senior investment strategist at Schwab. This includes what Gordon called a "huge decline" in airfare. The March PPI report didn't reflect most of the tariff policy that took effect early this month, so future PPI prints might be more important in picking up associated goods inflation. The wholesale market can be a leading indicator of price movements.

2. Sentiment tracker: The preliminary April University of Michigan Consumer Sentiment report looms after the open and could get more attention than usual after recent sentiment and confidence data suggested a gloomy outlook for slower growth and higher inflation. The final March headline sentiment reading fell to 57, down from 79.4 a year earlier, and analysts expect today's 10 a.m. ET data to show 54.8. Investors will likely keep close watch on data like year-ahead inflation expectations, which rose to 5% in March, the highest since November 2022. Long-run inflation expectations jumped to 4.1% from 3.5% the prior month, the largest increase since 1993, according to Briefing.com. Though some analysts downplay the importance of sentiment data, it's moved markets recently as it increasingly shows a stagflationary outlook. This particular report could also measure consumer sentiment as the stock market dove in the early days of April after Trump announced his tariff "liberation day."

3. Bank earnings come with warnings: Though the first quarter looked solid for banks reporting today, they're adding new gates to the fortress to prepare for trade-related trouble ahead. JPMorgan Chase, for instance, built its net reserves—or the amount banks have on hand in case of defaults—by $973 million and said in its release that it believes it's "prudent" to maintain excess capital and ample liquidity in this environment. "The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and 'trade wars,' ongoing sticky inflation, high fiscal deficits, and still rather high asset prices and volatility," said JPM CEO Jamie Dimon in the company's earnings release. Wells Fargo expects "continued volatility and uncertainty" and is positioning for an economic slowdown," said CEO Charlie Scharf in a statement. The banks are holding earnings calls with analysts as the market opens, potentially providing more color on trade tensions affecting their businesses and the economy.

- The U.S. Dollar Index ($DXY) dropped about 1% to just above 99, the first time since last July it's been under 100 and a three-year low. The dollar and Treasury market weakness this week suggests investors may be losing some faith in U.S. assets that have long been the foundation of the global economy.

- Magnificent Seven stocks were mixed this morning, as Nvidia (NVDA) and Microsoft (MSFT) found some early buyers but Apple (AAPL) lost ground. Apple sells around 20% of its iPhones in China and makes the vast majority of its iPhones there. Tesla also was in the red after China increased its tariffs.

- Semiconductor shares including Broadcom (AVGO) and Advanced Micro Devices (AMD) climbed around 1% ahead of the open after Reuters reported that U.S. chipmakers that outsource their manufacturing will be exempt from China's retaliatory tariffs.

- Texas Instruments (TXN) extended losses, falling another 4.7% ahead of the open and heading the other direction versus other semiconductor names in pre-market action.

- Freeport McMoRan (FCX) and Alcoa (AA) rose after being battered yesterday in the sell off on fears that an economic slowdown associated with the trade war might hurt demand for industrial metals.

- Stellantis (STLA) dropped nearly 3% in early trading after the automaker reported a 9% drop in first quarter shipments, Bloomberg reported.

- Shares of crypto-associated names MicroStrategy (MSTR, up 3%) and Coinbase (COIN, up 1.7%) rebounded after struggling Thursday as risk appetite sagged. Bitcoin (/BTC) itself is up more than 3% this morning to back above $82,000.

- Shares of Wells Fargo, JPMorgan Chase, and Morgan Stanley all climbed less than 1% after their strong earnings, less than these shares usually do when they successfully exceed estimates. Financial shares have suffered from fears of economic slowing, and the banks' warnings today might be keeping share gains light. BlackRock (BLK), the asset manager that also reported solid results today, climbed about 1%.

- Technology stocks rebounded slightly after sharp losses yesterday. Marvell Technology (MRVL) and Super Micro Computer (SMCI) both made light early gains.

- The CME FedWatch Tool shows a 28% chance of the Fed cutting rates 25 basis points at its early May meeting. The market prices in 85% odds of at least one rate cut by June.

- From a technical angle, any move higher today in the S&P 500^® index (SPX) could face resistance at the old support line of 5,400 and above that at 5,500, which is down roughly 10% from all-time highs.

Turbulent market conditions can make anyone worried about their portfolio, and Schwab offers several perspectives that provide ideas to keep in mind at such times:

Market Volatility: What to Do During Turbulence
Bear Market: Now What? 
Market Volatility in Retirement: Are You Prepared? 
Navigating the Markets: Tariffs and Trade

A "death cross" is forming on the daily S&P 500 index (SPX—candlesticks) as the 50-day moving average (blue line) falls toward the 200-day moving average (red line). The difference is down to about 25 points. However, the death cross historically hasn't been too reliable in indicating future index performance. The last time it happened was in early 2022.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

April 14: Earnings from Goldman Sachs (GS).
April 15: Earnings from Bank of America (BAC), Johnson & Johnson (JNJ), and United Airlines (UAL).
April 16: March retail sales, March industrial production, and earnings from ASML (ASML), Travelers (TRV), and Alcoa (AA).
April 17: March housing starts and building permits and earnings from Taiwan Semiconductor Manufacturing (TSM), UnitedHealth (UNH), D.R. Horton (DHI), and Netflix (NFLX).
April 18: U.S. markets closed for Good Friday holiday, no earnings or data expected.