Stock Market Update

The S&P 500 futures are down 87 points and are trading 1.8% below fair value, the Nasdaq 100 futures are down 255 points and are trading 1.5% below fair value, and the Dow Jones Industrial Average futures are down 632 points and are trading 1.7% below fair value.

The stock market is poised for more tariff-related fallout at the open after China announced an 84% tariff rate on U.S. imports in response to the 104% levy on imports from China by the U.S.

The selloff in the Treasury market has also contributed to the negative bias in early equity trading. The sharp rise in yields over the past several session fuels fears about persistent inflation pressure and a global slowdown related to trade policy. 

The 30-yr yield is up 18 basis points to 4.89% and the 2-yr yield is up five basis points to 3.79%. Longer tenors have seen increased selling in front of today's $39 billion 10-yr note auction, results at 1:00 p.m. ET.

The FOMC Minutes from the March 18-19 meeting will be released at 2:00 p.m. ET, which shouldn't contain anything too surprising. 

In corporate news:

• Apple (AAPL 169.50, -2.92, -1.7%): AppleInsider disputes Trump's claim that iPhone manufacturing could quickly move to the US
• Walmart (WMT 80.49, -1.30, -1.6%): expects Q1 sales growth to continue to be in line with its 3-4% outlook and annual sales and operating income growth guidance remains unchanged
• Delta Air Lines (DAL 35.68, -0.20, -0.6%): beats by $0.08, reports revs in-line; guides Q2 EPS in-line
• Cal-Maine Foods (CALM 85.84, -4.49, -5.0%): misses by $0.34, reports revs in-line; Announced definitive agreement to acquire Echo Lake Foods

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note while markets in Hong Kong (+1.0%) and Shanghai (+1.3%) outperformed. Japan's Nikkei: -3.9%, Hong Kong's Hang Seng: +1.0%, China's Shanghai Composite: +1.3%, India's Sensex: -0.5%, South Korea's Kospi: -1.7%, Australia's ASX All Ordinaries: -1.9%.
  • In economic data:
    • Japan's March Household Confidence 34.1 (expected 34.7; last 34.8) and March Machine Tool Orders 11.4% yr/yr (last 3.5%)
    • South Korea's March Unemployment Rate 2.9% (last 2.7%)
    • Australia's February Building Approvals -0.3% m/m, as expected (last 6.9%) and Private House Approvals 1.0% m/m, as expected (last 1.4%)
  • In news:
    • President Trump's reciprocal tariffs, including the 104% tariff on imports from China, went into effect overnight and did not draw an immediate response from China. However, top Chinese leaders reportedly met today to discuss the situation.
    • Citi reduced its forecast for this year's growth in China to 4.2% from 4.7% due to low expectations for a deal with the United States.
    • The Reserve Bank of New Zealand lowered its official cash rate by 25 basis points to 3.50%, as expected.
    • Similarly, the Reserve Bank of India lowered its policy rate by 25 basis points to 6.00%, which was also expected.
• Major European indices trade in the red with STOXX 600 approaching bear market territory. STOXX Europe 600: -4.3%, Germany's DAX: -3.6%, U.K.'s FTSE 100: -3.4%, France's CAC 40: -3.7%, Italy's FTSE MIB: -3.7%, Spain's IBEX 35: -3.2%.
  • No data today
  • In news:
    • Drug companies are among the laggards after the implementation of tariffs, including a tariff on pharmaceutical imports.
    • Reuters reported that the European Central Bank is likely to revise its forecast for the tariff impact during the initial year from its original forecast for a 50-basis point hit to growth.
    • French officials are worried that Italian Prime Minister Meloni's plan to meet with President Trump on April 17 could weaken the region's attempt at presenting a unified response to tariffs.