- The Trump administration’s tariff plans are here, what will the implications be for the S&P and Dow Jones?
- Technology companies in the S&P 500, like Apple and Microsoft, are particularly vulnerable to tariffs due to their reliance on non-US markets.
- Analysts expect protracted negotiations regarding tariffs, leading to continued market fluctuations.
- Despite the uncertainty, the S&P 500 historically performs well in April, offering a potential silver lining.
Wall Street Indexes have seen a mixed bag today with wild swings between gains and losses. Market participants moved closer to understanding the Trump administration’s tariff plans on Wednesday, but with few details available, financial markets stayed unpredictable.
There have been a host of rumors filtering through throughout the day with some suggesting President Trump’s Tariffs will be banned 10%, 15% and 20% depending on country and by industry.
Tariffs could greatly impact corporate profits, global growth, inflation, and Federal Reserve interest rate decisions.
At the start of the year, investors were optimistic about the Trump administration’s pro-growth policies, but a flood of tariff-related news has shaken their confidence.
While most agree that Wednesday’s much-anticipated announcement could be key to the short-term direction of global markets, there’s uncertainty about how prices will move and what might happen next, as negotiations could drag on.
Which stocks are most vulnerable to tariffs?
Companies that make up the S&P 500 generate about 40% of their revenue outside of the United States. This leaves Wall Street exposed to potential trade wars that hamper the free flow of goods and services.
S&P 500 technology companies such as Apple, Microsoft and NVIDIA rely on non-US markets for over half their sales. Given the poor performance by some of them so far in 2025, caution appears to be the only game in town.
Meanwhile the sectors that appear the least exposed to a potential trade war include real estate and utility companies who receive only a small amount of revenue from non-US sources.
Source: LSEG
We have heard comments from CEOs across various sectors in recent weeks warning about potential price increases being passed onto the consumer. This does not bode well for the US either. There is a notable split and in my opinion a clear lack of understanding by many politicians as to how tariffs may impact the everyday American as well as consumers in other countries.
What can we expect moving forward?
There does seem to be a lot of conflicting views as to how markets may shape up tomorrow and the days ahead. However, the one area analysts seem to agree on is that today’s announcement is just the beginning with most expecting protracted negotiations moving forward.
The possible outcomes can be seen as good, bad, or very bad. A good outcome would be fewer tariffs or ones that are more focused and balanced.
The announcement comes at a critical time for the S&P 500 after it confirmed a correction by dropping as much as 10% since mid February highs.
Looking for a reason to be optimistic around the S&P 500 and there may be a silver lining. Historically, the S&P 500 has performed well in April, averaging gains of over 2% since 1950 when starting below its 200-day moving average. Given the positive start to April however, the S&P 500 is already up around 0.80% at the time of writing.
Source: Isabelnet, Bloomberg
Technical Analysis – Dow Jones
From a technical standpoint, the Dow Jones has enjoyed a positive start to the month but today’s whipsaw price action does not bode well.
Given that markets are expecting negotiations post the tariff announcements today, markets could be set for more uncertainty and thus more whipsaw price action in the days ahead.
The Dow is hanging between two key levels having tested both today with immediate resistance resting at 42446 and support at 41950.
A move beyond 42446 brings the 42764 and 43402 handles into focus.
A move lower from here and 41400 and 40000 will become key areas of concern.
For now though, committing to a direction seems foolish even though the recent correction may look like a good opportunity for buyers, there is a chance that more downside may be in store for the Dow and other Wall Street indexes.
Dow Jones (US30) Daily Chart, April 2, 2025
Source: TradingView (click to enlarge)
Support
- 41950
- 41400
- 40000
Resistance
- 42446
- 42764
- 43402
