Closing Recap 

U.S. stocks finished with decent gains after fading sharply from strong opening highs, as initial optimism from specific tariff exemptions gave way to profit-taking and lingering trade uncertainty; Treasury yields fell significantly, while gold eased and oil finished flat. 

Key Takeaways 

• Gains Held After Fade: Major indices secured positive closes but finished well off session highs reached early on tariff exemption news. 
• Electronics Tariff Exemptions: Market initially surged after the U.S. exempted items like smartphones and computers late Friday, though Trump later added caveats. 
• “Sell the Rip” Persists: The sharp pullback from morning highs (Nasdaq briefly turned negative) indicates ongoing caution and a tendency to sell into strength. 
• VIX Plunges: Market volatility expectations eased significantly, with the VIX falling over 20% and below the 30 level for the first time in 10 days. 
• Yields Retreat Sharply: Treasury yields fell substantially, reversing a portion of last week’s dramatic spike. 
• Fed Waller Comments: Waller noted potentially limited economic impact from <10% tariffs but warned of higher inflation if tariffs are sustained. 
• Gold Eases, Oil Flat: Gold pulled back modestly from recent highs, while crude oil ended near unchanged after a volatile session. 

Market Overview 

U.S. equities experienced another session marked by significant intraday volatility, ultimately finishing with solid gains but well below the exuberant highs seen early in the day. The initial catalyst for the rally was confirmation (late Friday) that the White House had exempted key electronic goods, including smartphones, computers, and semiconductor components, from the recently imposed tariffs. This news sparked a strong surge in global technology stocks and pushed U.S. indices sharply higher at the open. 

Index	Up/Down	% Change	Last
DJ Industrials	312.08	0.0078	40524
S&P 500	42.61	0.0079	5405
Nasdaq	107.03	0.0064	16831
Russell 2000	20.68	0.0111	1880

However, the rally attempt lost steam by late morning, and indices pulled back significantly, with the Nasdaq briefly dipping into negative territory. This fade reflected persistent investor anxiety surrounding the broader trade conflict and President Trump’s subsequent comments downplaying the exemptions, suggesting levies were still likely and potentially part of a different tariff category. The market remains in a highly reactive state, where positive news provides temporary relief but underlying uncertainty prompts profit-taking (“sell the rips”). Midday comments from Fed Governor Waller offered a nuanced view, suggesting limited economic damage from tariffs below 10% but acknowledging the potential for inflation to reach 5% if tariffs are sustained. While slightly less hawkish than some recent Fed rhetoric, the comments didn’t provide a major boost. Despite the intraday swings, the significant drop in the CBOE Volatility Index (VIX) below 30 suggests some easing of the extreme panic seen last week, perhaps aided by the lack of new negative tariff escalations today. Investors now turn their attention to the start of earnings season.

Economic Data

The New York Fed’s consumer survey, highlighting rising inflation fears and unemployment expectations among households, contrasting with the recent official CPI data. 

• NY Fed Survey of Consumer Expectations (Mar): Median 1-year ahead inflation expectations rose significantly to 3.58% (from 3.13% in Feb), the highest since Sept 2023. The mean probability that the U.S. unemployment rate will be higher one year from now jumped +4.6 percentage points to 44.0%, its highest reading since the pandemic onset in April 2020. Median expected household income growth dipped to 2.8%. 

Commodities, Currencies, and Treasuries 

Gold futures eased slightly, pulling back 0.56% to settle near $3,226/oz after hitting record highs last week. The slight pullback occurred despite continued underlying support from safe-haven demand and recent dollar weakness. Crude oil prices finished near unchanged after a choppy session; WTI settled at $61.53. Prices were caught between the positive sentiment from the U.S. electronics tariff relief and downward pressure from OPEC cutting its demand growth forecast. Natural gas prices plunged nearly 6% to multi-week lows. Treasury yields fell sharply across the curve, with the 10-year yield dropping over 13 basis points to 4.36% and the 2-year yield falling nearly 12 basis points. This significant rally in bonds reversed a good portion of last week’s dramatic yield spike. The U.S. dollar was mixed to slightly weaker after its recent plunge.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.03	USD/bbl	61.53
Brent	0.12	USD/bbl	64.88
Gold	-18.3	USD/oz	3226.3
EUR/USD	-0.0003	USD	1.1358
USD/JPY	-0.48	JPY	143.02
10-Year Note	-0.131	%	0.04361

Looking Ahead 

With the market still highly sensitive to trade headlines, any further clarification (or lack thereof) from Washington or Beijing regarding tariffs will remain crucial. Investors will now increasingly focus on Q1 earnings reports, starting tomorrow with major banks (BAC, PNC) and healthcare giant JNJ, for insights into corporate performance and outlooks amidst the challenging trade environment. Upcoming economic data will also be watched, particularly for signs confirming or refuting the inflation and growth concerns highlighted in recent surveys and market volatility.