Trump’s Surprise Tariff Announcement Rattles Markets
Over the weekend, Trump proposed a 100% tariff on films produced outside the U.S., though details on implementation remained unclear. The unexpected move sent shockwaves through media and entertainment stocks, with Netflix ending an 11-day winning streak and Paramount Global and Amazon.com also slipping. While some losses were later trimmed, the announcement reinforced concerns about escalating trade tensions under a potential second Trump administration.
Since early April, when Trump first signaled a return to aggressive tariffs, markets have swung between optimism and caution. The S&P 500 initially plunged nearly 15% before recovering over the past two weeks. However, analysts warn that prolonged uncertainty could weigh on economic growth.
Sector Weakness and Economic Signals
Energy stocks led declines among S&P 500 sectors after OPEC+ accelerated production increases, raising fears of a supply glut amid shaky demand. Meanwhile, Berkshire Hathaway’s Class B shares dipped following Warren Buffett’s announcement that he would step down as CEO.
On the economic front, the ISM Services PMI showed stronger growth in April, but a sharp rise in input prices—hitting a two-year high—suggested tariffs are already stoking inflationary pressures. This complicates the Fed’s path as it balances growth concerns against persistent price increases.
Fed Decision Looms Large
All eyes now turn to Wednesday’s Fed meeting, where policymakers are expected to hold rates steady. Investors will parse Chair Jerome Powell’s remarks for clues on the timing of potential rate cuts. Markets currently anticipate 75 basis points of easing in 2025, with the first cut likely in July, per LSEG data.
Corporate Earnings Reflect Trade Jitters
Trade policy uncertainty is also affecting corporate earnings. Tyson Foods plummeted after missing revenue estimates, while Skechers surged on news of its $9.4 billion acquisition by 3G Capital.
Outlook: Volatility Ahead?
While Treasury Secretary Scott Bessent argued that Trump’s pro-growth policies would ultimately benefit markets, short-term turbulence remains a risk. As B. Riley’s Art Hogan noted, "Every week that goes by without trade deals being struck does economic damage." With earnings season in full swing and geopolitical risks simmering, investors may be in for a bumpy ride.