U.S. Stocks Stall After Monday Rally as Tariff Uncertainty Lingers

Key Takeaways

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Tariff Uncertainty: Markets await clarity on exemptions and scope of reciprocal tariffs ahead of April 2 deadline.

Tech Momentum: Chipmakers and AI-focused firms benefit from tariff relief hopes and spending plans.

Fed Caution: Slower inflation progress and limited rate cuts signal a cautious monetary policy stance.

Mixed Economic Signals: Service-sector rebound contrasts with manufacturing contraction, highlighting uneven growth.

Volatility Ahead: Technical indicators (e.g., GameStop’s conflicting charts) and earnings reports may drive short-term swings.

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U.S. stock futures paused on Tuesday after a robust rally the previous day, as investors weighed mixed signals about President Donald Trump’s proposed tariffs and awaited key economic data.

The S&P 500 and Nasdaq futures edged slightly lower, while the Dow Jones Industrial Average futures dipped marginally, reflecting caution ahead of the April 2 tariff deadline.

Monday’s Surge and Tuesday’s Pullback

Major indices surged on March 24, with the S&P 500 (+1.8%), Nasdaq (+2.3%), and Dow (+1.4%) rebounding from a four-week losing streak.

Tech stocks led the charge, including Tesla (+11.9%) and AMD (+7.5%), buoyed by tariff exemption hopes and AI spending plans.

However, futures stalled on Tuesday as investors digested conflicting tariff updates and awaited the Conference Board’s March consumer confidence index—a critical gauge of economic sentiment after February’s eight-month low.

Tariff Developments Dominate Sentiment

President Trump announced auto tariffs but hinted at exemptions for select nations, while pharmaceuticals and semiconductors remain under scrutiny.

The administration also imposed a 25% tariff on oil/gas imports from Venezuela and extended Chevron’s operations timeline in the country.

Investors are parsing whether the White House will narrow the scope of reciprocal tariffs, which could ease recession fears tied to trade disruptions.

Economic Data and Fed Outlook

• S&P Global’s March PMI: Service-sector activity rebounded (54.0 vs. 51.5 estimate), but manufacturing contracted (49.8), signaling uneven growth.

• Fed Policy: Atlanta Fed President Raphael Bostic signaled slower inflation progress, forecasting only one rate cut in 2025.

Sector Spotlight

• Tech: Momentum persists for chipmakers like Nvidia (+3.5%) and AMD, driven by tariff relief hopes and AI infrastructure spending (e.g., Amazon’s $100B 2025 capex).

• Retail: GameStop shares rose ahead of earnings, with technical indicators showing conflicting signals—a bullish RSI vs. a bearish “death cross” chart pattern.

• Crypto: Bitcoin regained the $87,000 mark, buoyed by optimism about tariff moderation.

Risks and Outlook

While Monday’s rally eased recession concerns, lingering tariff impacts and government layoffs threaten growth.

Analysts warn of a potential slowdown in consumer spending, which could pressure the S&P 500. Investors will monitor Q1 earnings (e.g., GameStop, Lululemon) and the FHFA house price index for further clues.

For now, markets remain in a holding pattern, balancing tariff relief optimism against economic headwinds.

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