TLDR:
- Trump’s tariffs on imports scheduled to take effect Wednesday, with China announcing 34% retaliatory tariffs starting Thursday
- Market concerns grow as tariffs may impact inflation, consumer spending, and business sentiment
- March CPI data coming Thursday will be closely watched following tariff announcements
- Big Banks (JPMorgan, Wells Fargo, BlackRock) to report earnings on Friday, kicking off Q1 earnings season
- S&P 500 has fallen 17% from February highs, marking worst week since March 2020
The global economy faces a critical juncture this week as tariffs announced by President Donald Trump are set to take effect on Wednesday, with China’s retaliatory measures following closely behind. These economic developments come as markets have already experienced steep declines and investors anxiously await inflation data and earnings reports that could signal the broader economic impact.
Last week, Trump announced 10% tariffs on all goods imported to the U.S., with additional tariffs for certain countries and 34% higher tariffs on goods from China. China responded Friday by announcing its own 34% tariffs on U.S. goods, escalating trade tensions between the world’s two largest economies.
The impact has been swift and severe in financial markets. The S&P 500 has dropped 17% from its February record high and just experienced its worst week since March 2020, when the COVID-19 pandemic first shocked markets. All three major U.S. indexes closed deeply in the red for a second consecutive day on Friday.
Economic Data in Focus
Market participants will closely watch Thursday’s release of the March Consumer Price Index (CPI) for signs of how inflation is trending ahead of the tariff implementation. Economists at Wells Fargo expect the CPI to remain unchanged in March, following a larger-than-expected decrease in February’s reading.
The Federal Reserve, which has kept interest rates steady partly due to inflation concerns, will release minutes from its March meeting on Wednesday. These minutes will provide more insight into how Fed officials view current economic conditions and their approach to interest rates given the evolving trade situation.
Additional economic indicators coming this week include the Producer Price Index (PPI) on Friday, which measures wholesale prices that could eventually affect consumer prices. Data on consumer sentiment, also scheduled for Friday, will include consumer price expectations that can influence inflation trends.
Small business sentiment data expected Tuesday will be watched carefully, as recent surveys have shown business owners growing pessimistic about economic conditions. Consumer credit data for February, coming Monday, will offer insight into household borrowing patterns amid economic uncertainty.
Banking and Earnings Season Kicks Off
Friday marks the beginning of first-quarter earnings season with reports from several major financial institutions. JPMorgan Chase, the world’s largest bank by market capitalization, will report after posting surprise profit growth last quarter through increased investment banking revenue and higher net interest income.
BlackRock’s announcement will follow its record quarter for assets under management. Investors will likely seek updates on the firm’s $30 billion AI infrastructure funding project with Microsoft, Nvidia, and Elon Musk’s xAI. Wells Fargo rounds out the major financial reports on Friday after narrowly missing revenue targets in the previous quarter.
Before the bank reports, several other companies will release earnings. Delta Air Lines reports Wednesday after lowering projections due to weakening travel demand. Levi Strauss, reporting Monday, has warned that economic conditions could hurt 2025 sales. Cal-Maine Foods, which has benefited from higher egg prices during a bird flu outbreak, reports Tuesday.
Other notable reports include Rust-Oleum maker RPM International on Tuesday, Corona beer brewer Constellation Brands on Wednesday, and online car seller CarMax on Thursday.
Techincal Analysis
According to analyst Trader Edge, the S&P 500 ($SPX) is approaching a key support zone between $4950 and $4800, coinciding with a major trendline going back to March 2020. With the weekly RSI in oversold conditions, a strong bounce from this level is possible.
The S&P 500 $SPX is nearing an important support zone around $4950-4800, aligning with a major trendline from March 2020.
With an oversold weekly RSI, we could see a decent bounce from this area 📊$SPY $ES pic.twitter.com/1DHuNWNrYN
— Trader Edge (@Pro_Trader_Edge) April 6, 2025
Path Forward for Markets
Market recovery in the near term may depend on several key factors. Negotiations between the U.S. and major trading partners could provide relief if they result in modified tariff plans. Trump told reporters Friday he would be open to negotiation depending on trading partners offering favorable terms.
According to Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, “If we see countries come to the negotiating table in the near-term and tariff rates are reduced, that would likely help alleviate some of the pressure on confidence channels.”
The upcoming CPI data could also shape the Federal Reserve’s approach to interest rates. A higher-than-expected inflation reading might delay potential rate cuts, which the market has been anticipating to help cushion economic weakness.
Economists tracked by FactSet expect March CPI to show a 2.6% year-over-year gain, lower than February’s 2.8% increase.
However, Nomura economists noted that “Front-loading of purchases and pre-emptive price increases in anticipation of higher tariffs appear to have pushed up core goods prices.”
Fed officials scheduled to speak this week include Chicago Fed President Austan Goolsbee and New York Fed President John Williams. Their remarks will be carefully analyzed for hints about the central bank’s thinking on inflation, interest rates, and the economic outlook in light of the tariff situation.
For investors facing market turbulence, clarity on either trade negotiations or monetary policy could provide the stability needed to navigate the uncertain economic landscape ahead.
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