Investors on a knife-edge as one fake headline prompts huge index swings. (0:15) JPM’s Dimon says tariffs will slow growth. (2:42) Mesa Air, Republic to merge in major regional carrier deal. (4:41)Show Notes Trump threatens 50% more tariffs on China MicroStrategy announces major digital lossEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Full Episode
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Monday, April 7th, and I'm your host, Kim Kahn. Our top story so far. The stock market has gone from edgy to jumpy to nervous as a long-tailed cat in a room full of rocking chairs, if you'll forgive the technical terms.
Volatility and swings are the order of the day, and investors look unsure which way to turn as the major averages bounce around. Case in point, one erroneous tariff headline pushed the Nasdaq composite, which had been down more than 4% at its intraday lows, to more than 4% in the green. Cheney strategist Guy Lebas noted the S&P 500 was tracing a 780-point intraday path. Those are just wild moves.
The headline that President Trump was considering a 90-day pause on tariffs on all countries except for China came from a known financial Twitter account, which said its source was Reuters. CNBC reported the headline, but later said it was unconfirmed, and the White House finally denied the headline, calling it fake news.
Instead, Trump later indicated that he was ready to heap an additional 50% tariff onto Chinese goods entering the U.S. as of Tuesday in response to China's 34% retaliatory tariffs on U.S. goods. That would bring the tariff rate on Chinese goods to more than 100%. The major averages are now down between 1 and 2%, but the swings haven't stopped, and a higher finish wouldn't be out of the question.
The VIX volatility index, also known as the fear gauge, topped 60 overnight, and it's currently near 50. That's a level that can prompt short-term buying. The CNN fear and greed index is at a lowly 4 on a scale of 0 to 100, indicating fear in the extreme. Also potentially supporting stocks is some unexpected action in the bond market, where treasury yields have been moving higher.
The 10-year yield is up more than 10 basis points, back above 4.1%. It touched below 3.9% on Friday. Renaissance Macro said the move could be related to people dumping their bonds to raise cash, which is, quote, not good. Another possibility is sovereign selling, which would also be worrying. What's unlikely is that it's a sudden renewed faith in growth.
Goldman Sachs lowered its 2025 fourth quarter over fourth quarter GDP growth forecast to 0.5% down from 1%. It also lowered its annual average GDP growth forecast from 1.5% to 1.3% and raised its 12-month recession probability to 45% up from 35%.
Chief Economist Jan Hatsias cites a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed. In his letter to shareholders, JPMorgan Chase CEO Jamie Dimon warned that the latest round of tariffs is likely to drive up inflation and dampen economic growth.
There also remains a growing need for increased expenditures on infrastructure, the restructuring of global supply chains and the military, which may lead to stickier inflation and ultimately higher rates than markets currently expect, Diamond said.
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