Market Gains With 90-Day Pause. Is Recession Fears Still There?

We have seen a significant day for the stock market, with major indices experiencing substantial gains.

In a significant move, President Donald Trump announced a 90-day pause on reciprocal tariffs for over 75 countries, excluding China.

This decision led to the best day for Wall Street since the 2008 financial crisis. NASDAQ has surged 12.16%, S&P 500 rose by 9.52% and DJIA increased by almost 3,000 points to close significantly at 7.87%.

But we need to understand that tariffs on imports from China increased to 125% from 104%. So I believe it is important for us, as investors to adjust our strategy accordingly.

Stay Calm With The Tariffs Turbulence

From this episode, it demonstrate that it is important to stay calm during a crisis, Sun Tzu's "Art of War" emphasizes discipline, self-awareness, and strategic preparation, suggesting that a calm demeanor in the face of chaos is crucial for effective leadership and decision-making. 

This would help us to really not go into the market when the market is in a freefall downside, while this rally gave some hope to the market, I think as investors we need to continue to remain calm and not jump in yet because if we see how the treasury yields have traded, the confidence on U.S. seem not to be on the strong side, I am holding onto my position in these stocks which have gained subsequently.

Weekly Mortgage Application Index Show Significant Increase

We have the Weekly MBA Mortgage Applications Index increased by 20.0% with the previous at -1.6%. February Wholesale Inventories rose by 0.3% with consensus at 0.3% while previous is at 0.8%.

We will be expecting some economic data on Thursday (10 Apr) 08:30 ET, we are expecting March CPI with consensus at 0.1% while previous was at 0.2%. The Core CPI with consensus at 0.3% while previous was at 0.2%.

Weekly Initial Claims will be expected with consensus at 225,000 while previous was at 219,000. The Continuing Claims will be released as well with the previous recorded at 1.903 million.

At 10:30 ET, we will see Weekly natural gas inventories while we have the previous was at +29 bcf. At 14:00 ET, March Treasury Budget will be reported while previous was recorded at -$307.0 billion.

All Eleven Sector In The Green Driven By Mega-Cap Surge

All 11 S&P 500 sectors closed at least 3.9% higher. The technology sector led the charge with a 14.2% gain, followed by consumer discretionary at 11.4% and communication services at 10.0%.

The market's upward momentum was driven by short-covering activity and a surge in the mega-cap space. Many influential stocks recorded double-digit percentage gains, including:

1. $NVIDIA(NVDA)$ was up 18.03 (+18.7%)

2. Apple (AAPL) was up 26.43 (+15.3%)

3. Tesla (TSLA) was up 50.24 (+22.6%)

4. Microsoft (MSFT) was up 35.93 (+10.1%)

5. $Amazon.com(AMZN)$ was up 20.44 (+12.0%)

Yield Finished Stronger With Tariffs Pause

Strong demand for the $39 billion 10-year note auction, particularly from foreign buyers also contributed to the rally. We saw the 10-year yield reached 4.50% before settling at 4.40%, which is 14 basis points higher than the previous day.

Market participants were analyzing the FOMC's March meeting minutes, which indicated increased downside risks to employment and economic growth and upside risks to inflation, amidst high uncertainty in economic outlooks. The minutes prompted a muted market response.

Stocks To Watch

$Tesla Motors(TSLA)$ saw a significant surge, leading the electric vehicle sector higher after the announcement of reduced tariffs for most U.S. trade partners. Investors remain optimistic about potential negotiations between the U.S. and China despite the tariffs on Chinese imports immediately increase to 125%. If it does not work out, this could impact the EV industry's reliance on Chinese components.

Chinese tech companies like $Alibaba(BABA)$ and Tencent, which had placed significant orders for these chips, expecting an export ban. As Trump administration paused an export ban on Nvidia (NVDA) H20 graphic processing units to China, this has help Nvidia (NVDA) share price got a boost.

On the retail side, we saw Amazon (AMZN) implement a move as part of broader strategy where AMZN cancel orders from China and Southeast Asia, aiming to reduce exposure to U.S. tariffs, this is to mitigate the impact of trade policies on its supply chain, as highlighted in its annual report.

Companies like Wayfair (W) and Urban Outfitters (URBN) also posted gains as the retail sector saw significant upswing, the pause on tariffs excluding China have provided a positive outlook for retailers dependent on international supply chains.

$Apple(AAPL)$ shares rose sharply after discussions about potentially manufacturing iPhones in the U.S. surfaced. There is something investors need to understand as analysts warned this could significantly increase production costs, potentially impacting the final price of iPhones.

Goldman Sachs quickly retracted its recession forecast after Trump's tariff pause, reverting to a non-recession baseline with a 45% probability. This shift reflects the potential positive impact of the tariff suspension on economic growth.

Bank stocks also benefited from the broader market rally, with major banks like Citigroup (C) and JPMorgan Chase (JPM) posting significant gains. The financial sector's performance underscores investor confidence in the economic outlook following the tariff pause.

Summary

If we looked at how things have developed for this tariffs turbulence, we have seen how earlier news of a 90-day pause have moved the market, now that President Trump announced it himself, market have reacted positively to this news, but we need to remember this as a short relief.

The ultimate goal for a sustainable market strength would be positive negotiation with the countries hit by large tariffs, the most significant one would be the US-China tariffs, and EU retaliation. So I would watching how the market develop, because there might be another correction when recession fears level rise again.

Appreciate if you could share your thoughts in the comment section whether you think market could go into another correction if the recession fear started again.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.