Bonds & Stocks
Wall Street’s risk-off mode prevailed in the countdown to the Federal Reserve decision, with stocks falling as disappointing corporate and economic signals fueled concern about the repercussions of President Donald Trump’s trade war. The buying wave that had powered equities from the brink of a bear market lost steam with investors awaiting more meaningful breakthroughs in negotiations between the US and its top trading partners. The S&P 500 fell about 1%. Ford Motor Co. suspended its guidance and said auto tariffs will take a toll on profit.
Economy
We expect April’s jobs report to show a solid net gain in nonfarm payrolls and a stable unemployment rate. Temperate weather, continued rollout of Biden-era stimulus funds, and past Fed rate cuts helped supported April’s labor market. But we don’t think this strength will last — and the report’s details will hint at the cracks. This report comes too early to capture the full employment hit from President Donald Trump’s “Liberation Day” tariffs. For example, the sharp drop in container-ship departures from China to the US began after the reference period for April payrolls had closed.
World
Billionaire investor Paul Tudor Jones said he expects US President Donald Trump to dial back China tariffs by 50%, but said stock markets could hit new lows even if he does. “You have Trump, who’s locked in on tariffs; you have the Fed, who’s locked in on not cutting rates,” said Jones, founder of macro hedge fund Tudor Investment Corp., speaking on CNBC Tuesday. “That’s not good for the stock market.”