To The Moon

Market Recap

April 9, 2025

A dramatic reversal in U.S. trade policy ignited one of the biggest single-day stock market rallies in history, halting a fast-moving financial panic and reawakening investor risk appetite. While risks remain elevated, the Trump administration’s retreat from maximalist tariffs has—at least temporarily—eased fears of a policy-induced recession.

Historic bounce

Markets: Earnings Reality Check Amid Repricing Surge

Despite the sharp bounce, valuation concerns remain front and center:

• The $S&P 500(.SPX)$ trades at 20.2x 2025 Wall Street consensus earnings — a premium multiple that leaves little room for error.

• For the market to deliver +10% upside from current levels, two conditions must be met:

  Earnings must remain stable into 2026 (i.e., no recession).

  Investor conviction must be unwavering in that soft-landing scenario.

“Markets can swiftly reshape government policy — and they just did. But unless fundamentals back it up, rallies like today’s are vulnerable to reversal.”

Data: VIX Drop Signals Near-Term Equity Support

• The $Cboe Volatility Index(VIX)$ hit crisis levels yesterday, comparable only to 2008 and 2020.

• That spike prompted a rapid policy U-turn from Washington — and the market responded.

• With the VIX now declining, we expect a follow-through equity rally in the near term.

The “Trump Put” may have a strike price of 5,000 on the S&P 500 — policy appears reactive at that threshold.

Policy Reversal: Trump’s Strategic Retreat — or Political Theater?

In a surprise morning announcement, President Trump:

• Dropped tariffs for all trade partners (except China) to a flat 10% rate for 90 days.

• Left China facing an aggressive 125% tariff regime — and China responded with 84% tariffs on U.S. goods, effective April 10.

“White House officials insisted the ‘tariff blitz’ was always part of the strategy — a show of strength designed to shake the status quo.” — CNBC

Imports

Market Reaction: From Panic to Euphoria

• $NASDAQ(.IXIC)$ : +12.2% (2nd-largest daily gain on record)

• S&P 500: +9.5% (biggest gain since Oct. 2008)

• Dow: +2,963 pts / +7.9%

U.S. stocks added $5.1T in market value today, nearly offsetting the $7.7T wiped out during the April 2–8 selloff.

Rotation Watch: Big Tech Is Back

Tech

• Big Tech (ex- $Tesla Motors(TSLA)$ ) has now recovered last week’s losses.

• $NVIDIA(NVDA)$ , $Broadcom(AVGO)$ , AAPL, and META led gains — with AAPL still lagging due to China exposure.

• Tech is underperforming YTD but remains the dominant outperformer over the past 12 months.

“Tech’s snapback is a key signal: investors believe policy risk is temporary — and AI-driven capex is not going away.”

Disruption & Macro Watch

• Delta Air Lines scrapped full-year guidance, citing weaker travel demand — an early warning for Q2 earnings season.

• Prada-Versace merger nears close at a discount due to tariff fallout — deal repricing may spread.

• Goldman Sachs rescinded its U.S. recession call post-tariff reversal, though risks of a sharp slowdown remain.

• Google’s settlement with employees over antitrust gag rules signals rising internal pushback on regulatory opacity.

• Housing trend turns frugal — average U.S. home size shrinks to 1,800 sq ft, the smallest since 2010.

Geopolitics & Market Psychology

• Former Treasury Secretary Larry Summers warned that bond and dollar sell-offs reflect “emerging market treatment” of U.S. assets.

• Today’s 30-year Treasury yield spiked above 5%, but a well-bid 10-year auction helped ease fears of failed issuance.

“Markets are now treating the U.S. like a risky debtor nation. This shift may not be fleeting.” — Summers on X

Key Market Levels

Indicator Current Watch Level Notes S&P 500 5,460 5,000 (Trump Put) Rebounded from edge of bear market VIX 39.4 (↓ from 52.3) <30 = Risk-On Sharp reversal suggests near-term rally 30Y Yield 5.02% 4.75% support Spike indicates global investor unease Apple Stock -8.6% WTD Lagging Big Tech Still vulnerable to China exposure.

Investor Sentiment: Volatile, But Opportunistic

• Institutional investors are rebalancing back into Big Tech and growth after being forced out by policy whiplash.

• Retail activity remains elevated in leveraged ETFs, though recent volatility-induced losses may dampen short-term flows.

• Mutual funds have shown modest rotation out of defensives and back into cyclical names post-policy pivot.

Outlook: Watching for Confirmation

The speed and scale of today's rebound are undeniably historic, but the path forward hinges on:

• Clarity on whether Trump’s 90-day tariff pause becomes permanent or just a delay.

• Earnings season — especially forward guidance from consumer, industrial, and travel sectors.

• Fed signals — a rate cut is increasingly priced in for late summer, but sticky inflation could complicate that view.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.