Schwab Market Update
Trade Troubles Clip Nvidia, Pulling Down Tech
Published as of: April 16, 2025, 9:26 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index |
5,396.63 |
-9.34 |
-0.17% |
| Dow Jones Industrial Average® |
40,368.96 |
-155.83 |
-0.38% |
| Nasdaq Composite® |
16,823.17 |
-8.32 |
-0.05% |
| 10-year Treasury yield |
4.32% |
Unch |
-- |
| U.S. Dollar Index |
99.63 |
-0.59 |
-0.58% |
| Cboe Volatility Index® |
31.74 |
+1.72 |
+5.7% |
| WTI Crude Oil |
$62.04 |
+0.71 |
+1.16% |
| Bitcoin |
$83,939.03 |
-$105.61 |
-0.13% |
(Wednesday market open) The trade war is back. Info tech led early losses after Nvidia (NVDA) announced a $5.5 billion charge due to the Trump administration's new requirement that the company get a special license to export its H20 AI chips to China. The product was designed especially to accommodate tight U.S. export controls, but the administration is concerned it could be used to help China build a "supercomputer."
The tech washout drowned this morning's upbeat March U.S. retail sales report, which came in above expectations: up 1.4% monthly. Analysts had expected a 1.3% rise. With autos excluded, the increase was 0.5%, which still beat the 0.2% Briefing.com consensus. "If it weren't for the tariffs issue, I think the market would be cheering this more," said Cooper Howard, director, fixed income strategy, at the Schwab Center for Financial Research. "It rose more than expected, driven (no pun intended) primarily by motor vehicles and auto parts dealers. It's likely that consumers pulled forward auto purchases prior to the tariffs."
Separately, the 10-year Treasury note yield stayed flat early today at 4.32% and is now down substantially from the peak near 4.6% last week. That topped out the largest one-week yield rally since 2001 and generated concern that investors might be stepping away from U.S. assets like Treasuries and the dollar amid trade upheaval. Comments late last week from Boston Fed President Susan Collins, who told Yahoo Finance that financial markets continue to function well and that the Federal Reserve is prepared to intervene if necessary, eased some of the alarm that sent yields skyrocketing, said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.
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Three things to watch
1. Chips do earnings: After the Nvidia news, the chip sector took another blow early today when ASML (ASML), an important European manufacturer of semiconductor chip equipment, provided revenue guidance for the current quarter that fell short of analyst's estimates. "The recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while," CEO Christophe Fouquet said in a statement. Tomorrow brings results from Taiwan Semiconductor Manufacturing (TSM), the largest fabricator of chips in the world and one firmly enmeshed in the Trump administration's efforts to rebuild that industry back home. The latest update on that came yesterday when Advanced Micro Devices (AMD) said it would team up with TSM to manufacture data center chips in the U.S., Barron's reported. It's the first time AMD's chips will be made in the U.S. and follows Nvidia's announcement that it will make AI supercomputers here.
2. Confidence shaken: While consumer confidence and sentiment were already easing due to worries about tariff-related inflation, confidence in the U.S. economy took another hit early this week. Citigroup (C) downgraded the U.S. market to Neutral from Overweight, Reuters reported, saying in a note that "the drivers of 'exceptionalism' are fading, both from a GDP and EPS perspective. Tariffs, as they stand, could negatively impact U.S. EPS the most." Separately, former U.S. Treasury Secretary and former Federal Reserve Chairman Janet Yellen told CNBC Monday that the recent rise in Treasury yields reflects broad concern over U.S. policy. However, Yellen didn't think the recent Treasury market weakness indicated systemic problems. "I don't think we're seeing dysfunction—in the sense of liquidity drying up in the markets—but a pattern suggestive of loss of confidence in U.S. economic policy," Yellen told CNBC, according to Bloomberg. She called the pattern, "really very worrisome."
3. Hazy forecasts expected: The main theme this earnings season could be less clarity around company outlooks. "Earnings are OK so far (mostly from financials) but expect that more companies might withdraw guidance for analysts covering their stocks," said Liz Ann Sonders, chief investment strategist at Schwab. She added that Wall Street year-end targets for the major indexes have the widest span in at least 25 years. "Tariff uncertainty amid conflicting messages from administration folks is likely to persist," Sonders added. In an interview on CNBC yesterday, Bank of America (BAC) CEO Brian Moynihan elaborated on why forecasting is so difficult, noting that it's not just uncertainty around tariffs but also immigration and deregulation policy that's affecting business decisions. Consumer spending and lending were strong in the first quarter, he said, but he's watching to see how various policy changes might affect businesses in terms of supply chains and availability of workers. The company has cash set aside in case of economic trembles.
On the move
- Nvidia dropped 6.5% after rising 1.3% yesterday when President Trump hailed the company's announcement that it plans to build AI supercomputers in the U.S. The sweet quickly turned sour with this morning's news of a charge for inventory and canceled sales of its H20 chip to China. This new headwind makes sequential growth much more difficult, a Jefferies analyst said today, according to Barron's. China represents about 13% of Nvidia's sales.
- Other chip sector stocks felt Nvidia's pain this morning, with Broadcom (AVGO) down 3.8%, Advanced Micro Devices (AMD) falling 7%, and Intel (INTC) down 2.8%. The new export restrictions on China are only the most recent in a long effort by first the Biden and now the Trump administrations to limit technology exports to the country. AMD's sales to China are also affected by the new Trump export restrictions.
- ASML lost about 4% after including disappointing near-term guidance in its quarterly earnings report. However, the firm stood by its 2025 and 2026 full-year guidance and said conversations with customers so far back its views that those will be growth years.
- Hewlitt Packard Enterprise (HPE) slipped after gaining 5% yesterday when Bloomberg reported that activist investor Elliott Management had taken a $1.5 billion position in shares of the software and networking firm.
- United Airlines (UAL) climbed 6.5% in early trading after beating analysts' consensus for earnings per share and reporting revenues that met consensus by rising 5.4% year over year. But the first quarter was a time before tariff fears truly took hold. In a nod to the current environment, United said in its press release that it's removing four percentage points of scheduled domestic capacity starting in the third quarter and "continuing to make prudent adjustments to the utilization rate of its fleet, including ongoing reductions in off-peak flying on lower demand days."
- J.B. Hunt Transport Services (JBHT) fell 6% in pre-market trading following yesterday's first quarter earnings results that slightly surpassed analysts' expectations. The company reported that demand remained strong for intermodal during the quarter, but several parts of the business saw lower revenue than a year ago.
- Travelers (TRV) added 3% ahead of the open after reporting better-than-expected earnings, though they were down from a year ago due to losses from California wildfires.
- China reported a 5.4% rise in first quarter year-over-year gross domestic product (GDP), unchanged from the fourth quarter increase and above analysts' expectations of 5.1%. Exports surged ahead of expected tariffs, which could be a headwind moving forward.
- The CME FedWatch Tool shows an 18% chance of the Fed cutting rates 25 basis points at its early May meeting. The market prices in 72% odds of at least one rate cut by June.
More insights from Schwab
Capitol update: With Congress in recess, representatives might hear from constituents on tariffs back home. "It will be interesting to see whether that contributes to any pushback from Congress on administration policies when lawmakers return to Washington," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab, in his latest analysis. Upon return, they face tough tax and spending cut decisions.
" id="body_disclosure--media_disclosure--273206" >Capitol update: With Congress in recess, representatives might hear from constituents on tariffs back home. "It will be interesting to see whether that contributes to any pushback from Congress on administration policies when lawmakers return to Washington," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab, in his latest analysis. Upon return, they face tough tax and spending cut decisions.
Resources for volatile markets
Turbulent market conditions can make anyone worried about their portfolio, and Schwab offers several perspectives that provide ideas to keep in mind at such times:
Market Volatility: What to Do During Turbulence
Bear Market: Now What?
Market Volatility in Retirement: Are You Prepared?
Navigating the Markets: Tariffs and Trade
Chart of the day
Data sources: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Sectors that traditionally do better when economic optimism improves have shown signs of life the last week. Both the S&P Financial Select Sector Index (IXM—candlesticks) and the S&P Technology Select Sector Index (IXT—purple line) remain down sharply over the last three months, as this chart shows, but up substantially from lows carved last week.
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
April 17: March housing starts and building permits and earnings from Taiwan Semiconductor Manufacturing (TSM), UnitedHealth (UNH), D.R. Horton (DHI), and Netflix (NFLX).
April 18: U.S. markets closed for Good Friday holiday, no earnings or data expected.
April 21: March leading indicators.
April 22: Expected earnings from 3M (MMM), Halliburton (HAL), Tesla (TSLA), Kimberly-Clark (KMB), Lockheed Martin (LMT), Northrop Grumman (NOC), and Verizon (VZ).
April 23: March new home sales and expected earnings from Boeing (BA), AT&T (T), Philip Morris (PM), IBM (IBM), and Texas Instruments (TXN).