To The Moon

On Thursday (03 Apr) we saw the stock market experienced sharp selloff after the announcement of sweeping tariffs on almost all U.S. trading partners.

The DJIA plunged more than 1,500 points to down by 3.98%, NASDAQ slumped by 5.97% and S&P 500 also fell by massive 4.84%.

A 10% tariff was imposed on global imports, effective 05 April. Higher rates were imposed on specific countries, which will come into effect on 09 April, China got an additional 34% on top of its existing 20%, Japan got 24%, SEA region, Vietnam got 46%, India also got 26% and the EU was hit by 20%.

President Trump's recent announcement of sweeping tariffs has sent shockwaves through global financial markets, significantly impacting U.S. stocks. The tariffs, which include a minimum baseline rate of 10%, have raised fears of a global trade war, leading to a dramatic selloff. Major indices, including the S&P 500, Nasdaq Composite, and Dow Jones, experienced substantial declines, with the S&P 500 erasing approximately $1.7 trillion in market capitalization. Investors sought refuge in U.S. debt, pushing prices higher.

The apparel sector is facing significant challenges as new tariffs on Southeast Asian imports, ranging from 30% to 49%, threaten to increase costs for U.S. companies. These tariffs come as many companies had previously shifted production to these regions to avoid higher costs from China. The increased tariffs may force companies to pass on costs to consumers, potentially impacting demand.

S&P 500 Sector Faced Heavy Selling Pressure

Small-cap Russell 2000 sank 6.6%. Large-cap tech and many discretionary-related industries faced heavy selling pressure.

Apple (AAPL) dropped 9.3%, and NVIDIA (NVDA) fell 7.8%, dragging down semiconductor shares. Oil prices decreased due to demand concerns, with WTI crude falling to $67/bbl.

The energy sector declined by 7.5%, technology by 6.9%, and discretionary by 6.5%. The leveraged ETF market faced a downturn as these funds, which amplify returns through leverage, struggled amid heightened volatility. The selloff in major indices has further exacerbated losses for these ETFs, intensifying negative momentum in the trading environment.

The Magnificent Seven stocks, including $Apple(AAPL)$ , $Amazon.com(AMZN)$ , and $Microsoft(MSFT)$ , are closely tied to the fluctuations of the U.S. dollar and Euro. A potential relief rally in these stocks could lead to a similar rally in the U.S. dollar, impacting gold prices, which have seen a year-to-date increase.

Note Yield Down Significant As Treasuries Surged

As stocks slid, Treasuries surged, leading to sharply lower rates.

The 10-year yield dropped 14 basis points to 4.06%, and the 2-year yield dropped 18 basis points to 3.72%.

Employment Contract First Time Since September

Weekly Initial Claims came in at 219K while consensus is at 224K) compared to a revised prior of 225K. Weekly Continuing Claims was 1.903 million as compared to revised prior at1.847 million.

Initial claims remained low, but continuing claims increased to their highest level since November 2021, indicating difficulty in returning to work.

On the trade side, February Trade Balance was lower at -$122.7 billion compared to consensus -$121.0 billion) while revised prior was at -$130.7 billion.

The trade deficit narrowed slightly but remained at record levels due to pre-tariff purchases. March S&P Global US Services PMI saw Final at 54.4 and prior at 54.3. March ISM Services was 50.8% compared to consensus at 53.2% while we saw prior at 53.5%.

Growth in the services sector slowed notably in March, with employment contracting for the first time since September.

Market participants are anticipating the March Employment Situation report, which will be released at 8:30 ET on Friday (04 April).

Stocks To Watch

$NVIDIA(NVDA)$ has announced that its custom processor will power the newly unveiled Nintendo Switch 2, which promises enhanced gaming experiences with up to 4K resolution and 120 FPS at 1080p. The console, featuring AI-driven enhancements and improved graphics, is set to launch in the U.S. on June 5. Nvidia's involvement highlights the company's continued innovation in gaming technology.

HP (HPQ) and Dell Technologies (DELL) have been hit hard by the tariff announcements, with shares falling 13% and nearly 15%, respectively. The hardware sector is under pressure due to policy uncertainty and a slowdown in enterprise spending, compounded by the tariffs on diversified manufacturing away from China.

Intel (INTC) and $Taiwan Semiconductor Manufacturing(TSM)$ are reportedly in talks for a joint venture involving Intel's foundry facilities. This collaboration could leverage TSMC's expertise in chipmaking, although no final agreement has been reached yet.

Amazon (AMZN) is nearing one of its lower which happened in August 2024 ($170), so whether there will be some successful negotiation for the tariffs hitting AMZN remain to be seen, but that could present a good point of purchase. I have purchased AMZN at one of its lows near $175.

Summary

We will continue to see sharp selloff as market trying to figure out which sectors could be going up amidst the tariffs, one of the sectors to watch might be the technology software as this sector might be the first among others to recover if there is any positive updates to the tariffs reversal.

Appreciate if you could share your thoughts in the comment section whether you think is it the time to start planning to add shares because of the discounted price.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.