These Were the Big Movers on the S&P 500 on Monday Decliners Tractor Supply Co. (TSCO) shares sank 5.8%, losing the most of any stock in the S&P 500. The retailer of rural lifestyle products has pointed to its past success in adapting to tariffs during Trump’s first presidential term, which its CEO said involved a roughly even split of the burden between the company itself, supplying manufacturers, and price increases for customers. While the company imports a relatively limited amount of the products it sells, a significant amount of those imports come from China. At the same time, tariffs on materials like steel and aluminum could also add to price pressure.

(TSCO) shares sank 5.8%, losing the most of any stock in the S&P 500. The retailer of rural lifestyle products has pointed to its past success in adapting to tariffs during Trump’s first presidential term, which its CEO said involved a roughly even split of the burden between the company itself, supplying manufacturers, and price increases for customers. While the company imports a relatively limited amount of the products it sells, a significant amount of those imports come from China. At the same time, tariffs on materials like steel and aluminum could also add to price pressure. Shares of tool manufacturer Stanley Black & Decker (SWK) dropped 5.7%. Monday’s decline extended losses posted last week following Trump’s tariff announcement. With a significant production footprint in Asia, Stanley could see a major impact from the intensifying trade conflict. During its latest earnings call, the company’s chief financial officer (CFO) estimated a potential net tariff impact of $10 million to $20 million in 2025, but he indicated that the company would implement countermeasures, including supply chain adjustments and pricing measures.

(SWK) dropped 5.7%. Monday’s decline extended losses posted last week following Trump’s tariff announcement. With a significant production footprint in Asia, Stanley could see a major impact from the intensifying trade conflict. During its latest earnings call, the company’s chief financial officer (CFO) estimated a potential net tariff impact of $10 million to $20 million in 2025, but he indicated that the company would implement countermeasures, including supply chain adjustments and pricing measures. Homebuilder stocks lost ground, reversing some of the strong gains posted late last week as the broader markets tumbled. In addition to signs of a possible reprieve in interest rates, the exemption of lumber imports from Canada contributed to enthusiasm around the homebuilding sector on Friday. However, the National Association of Home Builders (NAHB) indicated that tariffs on other key materials could still contribute to price increases for homes around the country. Shares of D.R. Horton (DHI), PulteGroup (PHM), and NVR (NVR) all declined roughly 5% on Monday. Advancers Shares of companies exposed to artificial intelligence technology staged a partial recovery from the tariff-driven selloff. Analysts at Bernstein said that, while it is difficult to predict how long or deep the market downturn may turn out to be, they maintain their belief in the underlying AI story. Shares of AI server maker Super Micro Computer (SMCI) jumped 10.7%, notching the top performance of any S&P 500 stock, while shares of other AI players also pushed higher. Super Micro Computer CEO Charles Liang speaks during the HumanX AI Conference in Las Vegas last month. Big Event Media / Getty Images Dollar Tree (DLTR) shares jumped 7.8% after Citi upgraded the discount retailer’s stock to “buy” from “neutral.” Analysts noted that Dollar Tree could have the flexibility to raise its prices as tariffs affect global supply chains, suggesting that the company’s stores could lift price tags to $1.75 from current levels of $1.25 without encountering significant pushback. Citi’s team also recalled that when Dollar Tree initially moved past the $1 price point several years ago, the company saw sales growth and a boost in its EBIT margin.

(DLTR) shares jumped 7.8% after Citi upgraded the discount retailer’s stock to “buy” from “neutral.” Analysts noted that Dollar Tree could have the flexibility to raise its prices as tariffs affect global supply chains, suggesting that the company’s stores could lift price tags to $1.75 from current levels of $1.25 without encountering significant pushback. Citi’s team also recalled that when Dollar Tree initially moved past the $1 price point several years ago, the company saw sales growth and a boost in its EBIT margin. Shares of Texas Pacific Land (TPL), which owns major acreage in the oil-rich Permian Basin, added 6.9%. Emerging from the bankruptcy of a railroad company in the 19th century, the land trust has been exploring opportunities to diversify its revenues, including water sales, easements, and even cryptocurrency mining projects. -Michael Bromberg

US Steel Soars After Trump Orders Review of Nippon Deal Shares of U.S. Steel (X) jumped on Monday after President Donald Trump said the company’s proposed acquisition by Japan’s Nippon Steel should be reviewed. Trump said in a presidential action that he is ordering the Committee on Foreign Investment in the United States (CFIUS) to “conduct a review of the acquisition of U.S. Steel by the Purchasers to assist me in determining whether further action in this matter may be appropriate.” Former President Joe Biden blocked the $14.1 billion deal in the final days of his presidency, citing national security concerns. Trump noted that in the order blocking the deal, Biden “reserved the right” to issue further orders on the sale. The companies later sued the U.S. government to challenge the blockage. Within the next 45 days, Trump has asked CFIUS to “submit a recommendation to me describing whether any measures proposed by the parties are sufficient to mitigate any national security risks” posed by the deal, as identified by the committee. TradingView Shares of U.S. Steel soared 16% on Monday to a new 52-week high. -Aaron McDade

Here’s How Many Americans Own Stocks Stocks have been hit hard. That’s cut into the wealth of a broad swath of Americans. More than 60% of Americans have money in the market, according to Gallup data from May, up from a bit above 50% in the middle of the last decade. That reflects comparatively large holdings among those with annual incomes at or above $100,000—but Gallup also found that about two-thirds of middle-income Americans, and a quarter of those with annual incomes below $40,000, were invested through some combination of stocks or funds. That tracked with data released in late 2023 by the Federal Reserve, which found that more than a third of families in the bottom half of the U.S. income distribution held stock—along with more than three-quarters of the upper-to-middle income group and 95% of the top decile. Last’s week’s dramatic and downbeat market response to the Trump administration’s latest announcement on tariffs has led many investors, from Wall Street to Main Street, to wrestle with how to respond as they’ve seen their portfolios shrink. A steep two-day drop-off left some waiting for the market to change direction and others who expect the drubbings to continue; Monday morning, stocks have whipsawed. About a fifth of Americans who invest in stocks believe they have a “high” risk tolerance, according to YouGov data released Friday, while about 40% said they generally maintain their investments amid economic or market uncertainty. “Your brain has identified a risk and it’s screaming at you to run away. It’s working as intended. Otherwise, I’d recommend you get your head checked,” wrote Callie Cox, chief investment strategist at Ritholtz Wealth Management, in an emailed commentary. “Honor your natural tendencies, but don’t listen to them. In many situations, touching the hot stove isn’t the best solution.” -David Marino-Nachison

Medicare Payment Boost Sends Insurance Stocks Soaring Several big health-insurance stocks jumped in extended trading Monday after the federal government said it would pay Medicare insurers more next year than previously expected. The Centers for Medicare & Medicaid Services said payments will increase by 5.06% on average, more than the 2.83% the government said it anticipated in January. Payments such as these to insurers cover costs for Medicare Advantage, in which private plans are an alternative to the government-run health care program for Americans 65 and older. The government said it is increasing the payments to reflect increased costs for health care.

The news lifted several stocks in the after-hours session. Humana (HUM) was recently up 12%, while CVS Health (CVS) rose 7%. Elevance Health (ELV) and UnitedHealth Group (UNH) each added about 6%. -David Marino-Nachison

A Rollercoaster for Major Indexes on Monday Major indexes finished relatively unchanged on Monday after two days of massive losses. But the action was anything but calm. The Nasdaq Composite fell as much as 5.2% in the opening minutes of trading before jumping as much as 4.5% above Friday’s close by around 10:15 a.m. ET, after unfounded reports that President Trump could delay imposing the tariffs that have sent markets into a tailspin. The S&P 500 fell as much as 4.7% and rose as much as 3.4% over the period. As for the Dow, the blue chip index jumped nearly 2,600 points from its early low to its high for the session. TradingView

Nvidia, Supermicro Surge as AI Stocks Rebound From Rout Shares of Nvidia (NVDA) surged Monday afternoon as semiconductor and artificial intelligence stocks attempted to rebound from a tariff-fueled selloff. Nvidia gained 3.5%, leading gains on the Dow Jones Industrial Average. Broadcom (AVGO), Micron Technology (MU), Lam Research (LRCX), Applied Materials (AMAT), and other semiconductor stocks also rose, boosting the PHLX Semiconductor Index (SOX) about 3.5%. “We are not sure where Nvidia (or anything else) will bottom in the near term,” Bernstein analyst Stacy Rasgon wrote in a note to clients Monday. “But we do believe the AI narrative is still real. And once things do settle down (hopefully soon!) the stock at these levels is probably worth a look.” Shares of server maker and Nvidia partner Super Micro Computer (SMCI) jumped more than 10%, leading gains on the S&P 500. Nvidia partner Rigetti Computing (RGTI) saw its shares soar 11% after it was chosen along with IonQ (IONQ) and quantum computing companies to participate in a Department of Defense program. Other AI investor favorites, including Palantir (PLTR), were higher as well.

-Kara Greenberg

Morgan Stanley Downgrades Banks as Recession Risks Rise Analysts at Morgan Stanley on Monday cut their outlook on large- and mid-capitalization banks to “in-line” from “attractive,” writing that President Donald Trump’s tariffs are increasing recession risks. In their note on large-cap banks, Morgan Stanley analysts led by Betsy Graseck wrote that while their base case is for a “significant” gross domestic product (GDP) slowdown, recession risks have surged. The slower GDP growth, coupled with increasing economic uncertainty, is set to “push out the nascent capital markets rebound, incrementally slow loan growth, and drive net charge offs across consumer and commercial loans,” they wrote. They said that American consumers, who drive U.S. GDP growth, “do not have savings levels to absorb these tariffs and continue spending at pre-tariff levels.” The analysts also downgraded Goldman Sachs (GS) to “equal-weight” from “overweight,” saying the Wall Street powerhouse is the most exposed to investment banking revenue, which is more vulnerable “to recession risk and deteriorating market conditions” than that of traditional commercial banks. They upgraded Bank of America (BAC) to “overweight” from “equal-weight,” citing cheap valuations. Shares of Goldman Sachs slipped nearly 1% intraday, while those of Bank of America are up more than 3%. Meanwhile, Morgan Stanley analysts led by Manan Gosalia downgraded midcap banks, “as higher and faster than expected tariffs raise recession risks, weigh on loan growth and in-turn, forward EPS and multiples.” -Nisha Gopalan

Oil Prices So Low That It’s Not Always Profitable to Drill Oil prices fell to their lowest level in years on Monday as worries about the reciprocal tariffs President Donald Trump announced last week continued to ripple through global markets. Futures contracts for West Texas Intermediate, the U.S. crude oil benchmark, traded as low as $58.96 on Monday morning, their first dip below $60 since April 2021. Oil prices have slumped about 15% since Wednesday when Trump announced sweeping tariffs that are expected to raise the effective U.S. tariff rate to its highest level in more than a century. Economists warn that tariffs of that magnitude will likely slow global economic growth, dealing a blow to oil demand. Trump campaigned on taming inflation and has tied that goal to cheaper energy. “Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION,” he posted to Truth Social on Monday morning. Oil prices are a direct input to inflation formulas and indirectly influence prices through their impact on the cost of producing and shipping goods. They are also volatile, which is why some economists consider core inflation, which excludes energy and food prices, a better indicator of inflationary trends than the headline figure. The Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation measure, increased 0.3% in December, January, and February. Meanwhile, core PCE accelerated in each of those months and rose 0.4% in February. While lower oil and gas prices could offset some tariff-related price increases, they’re likely to have economic fallout of their own. According to the most recent Dallas Fed Energy Survey, oil producers require an average price of $65 a barrel to profitably drill a new oil well, with nearly 60% requiring prices to be higher. That could complicate Trump’s plan to “unleash American energy” by encouraging producers to ramp up oil production. “In a strange twist to the administration’s hope for more domestic oil and gas production, higher steel tariffs may result in fewer wells completed due to higher completion costs,” one oilfield services firm recently told the Dallas Fed. “The margins are thin enough for many wells, and this will likely result in downward pressure on total wells brought online.” The president has insisted that higher costs can be offset by slashing regulations, which he claims burden oil and gas producers with unnecessary costs. However, some drillers operating in the Permian Basin, the source of nearly half of America’s oil, say the new administration’s regulatory plans will be “no real change at all.” “We still get our permits from the Railroad Commission in Texas, for example, not the Environmental Protection Agency,” according to one firm. “The federal regulatory regime matters if you are operating in the Gulf of Mexico or Alaska but not for the Permian, Eagle Ford, Bakken, Utica, etc.” -Colin Laidley

Why Tesla’s Biggest Bull Just Slashed His Target Price Tesla (TSLA) stock tumbled Monday as the selloff sparked by the Trump administration’s new tariffs continued, and Wedbush analysts led by bull Dan Ives cut their price target for the stock to $315 from $550 previously. The analysts called the current tariff uncertainty a “double whammy” for Tesla, as it will negatively affect the electric vehicle maker’s costs and profit margins, and also drive more negative reaction to CEO Elon Musk and the brand, leading to lower sales. President Trump and Elon Musk in a Tesla model S during an event at the White House on March 11, 2025. Jabin Botsford / The Washington Post / Getty Images “Tesla has essentially become a political symbol globally….and that is a very bad thing for the future of this disruptive tech stalwart and the brand crisis tornado that has now turned into an F5 tornado,” the analysts wrote. They estimated Tesla has lost “at least 10% of its future customer base” over “self created brand issues.” The impact will also be felt in China, where the analysts said the impact of Musk’s association with the Trump administration could drive Chinese consumers to buy increasing numbers of EVs made by domestic companies like BYD. The analysts called for Musk to “step up, read the room, and be a leader in this time of uncertainty.” They said their bullish view of Tesla remains for the long term but “there is no denying this is a pivotal moment of truth for Musk to turn things around…or darker days are ahead.” Tesla shares were down 4% in recent trading and have fallen about 43% since the start of the year. -Aaron McDade

One of Trump’s Biggest Wall Street Backers Wary of Tariff Plan Even one of President Donald Trump’s most vocal backers is wary of his tariff plan. Bill Ackman, the billionaire CEO of hedge fund Pershing Square and one of Trump’s most fervent supporters on Wall Street, on Sunday criticized the president’s “massive and disproportionate tariffs” on key U.S. trading partners and urged Trump to call a “90-day time out” to allow for negotiations. “Business is a confidence game. The president is losing the confidence of business leaders around the globe,” Ackman posted to X on Sunday evening. “The consequences for our country and the millions of our citizens who have supported the president—in particular low-income consumers who are already under a huge amount of economic stress—are going to be severely negative. This is not what we voted for.” Bill Ackman attends the annual DealBook summit hosted by the New York Times, on Dec. 4, 2024. Michael M. Santiago / Getty Images Ackman equated Trump’s reciprocal tariffs—including a 20% levy on imports from the European Union, 46% on Vietnamese goods, and 24% on Japanese products—with declaring “economic nuclear war on every country in the world,” and warned the move would obstruct investment in the U.S. and cause lasting damage to America’s reputation on the world stage. In separate posts Sunday evening and Monday morning, Ackman placed blame for the tariff plans squarely on the president’s advisors. “I just figured out why @howardlutnick is indifferent to the stock market and the economy crashing,” he wrote late Sunday, referring to Commerce Secretary and former Cantor Fitzgerald CEO Howard Lutnick. “He and Cantor are long bonds. He profits when our economy implodes,” Ackman wrote. National Economic Council Director Kevin Hassett criticized Ackman on Fox News on Monday morning, saying, “I would urge everyone, especially Bill, to ease off the rhetoric a little bit. … The idea that it’s gonna be a ‘nuclear winter’ or something like that is completely irresponsible rhetoric.” Ackman softened his comments on Lutnick Monday morning, writing that “It was unfair of me to lash out at @howardlutnick. I don’t think he is pursuing his self interest… I am just frustrated watching what I believe to be a major policy error occur after our country and the president have been making huge economic progress that is now at risk due to the tariffs.”4 But Ackman continued to push back on the tariff plans. “The formula used by the administration to calculate tariffs made other nations’ tariffs appear four times larger than they actually are,” he wrote Monday morning, citing research from the American Enterprise Institute, a right-leaning think tank. “The President’s advisors need to acknowledge their error before April 9th and make a course correction before the President makes a big mistake based on bad math.” -Colin Laidley

Goldman Cuts GDP Estimate, Raises Risk of Recession Goldman Sachs analysts told clients Sunday they are cutting their forecast for gross domestic product growth in 2025, and raising their recession risk forecast in response to the Trump administration’s new tariffs. The analysts now put a 45% chance on a recession coming in the next year, up from 35% previously, due to a “sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.” However, that 45% is predicated on the effective tariff rate rising by 15 points, less than it’s currently expected to rise if the Trump administration’s tariffs announced last week go into effect on Wednesday. If most or all of those tariffs are enacted and the effective tariff rate rises by roughly 20 points, the analysts said the likelihood of a recession could rise above 50%. The Goldman analysts lowered their GDP growth forecasts to 0.5% for the fourth quarter and 1.3% for 2025, down from 1% and 1.5%, respectively. The analysts said they now expect the Federal Reserve to make three consecutive quarter-point rate cuts starting in June, a month earlier than they previously expected cuts to start. In a recession, they expect about 2 points in total cuts over the next year. The major indexes were down sharply Monday morning, extending last week’s tariff-fueled selloff after the stock market had one of its worst weeks in years. -Aaron McDade

Wall Street Banks Trim S&P 500 Forecasts Banks are scaling back their 2025 outlooks for U.S. stocks as uncertainty about the economy and markets escalates. The benchmark S&P 500 could slump to 4,700, a further 7%-8% decline from Friday’s close, if President Donald Trump sticks with his tariff plans or the Federal Reserve doesn’t ease interest rates, Morgan Stanley analysts wrote. The analysts said they had offered a 5,100-5,200 technical support level for the S&P 500 last Thursday but noted that “with the market quickly trading there on Friday and overnight futures down another 3-5% so far, our thoughts turn to the next area of support, which lies closer to the 200-week moving average, or 4700.” Oppenheimer analysts on Monday cut their target to 5950 from 7100. “The equity market appears oversold in our view,” Oppenheimer’s analysts wrote, “with uncertainty at levels investors find hard to embrace along with what we call ‘a negative pitch book’ that seemingly projects negative outcomes to infinity that’s taken hold in the near term of trader, investor, and consumer sentiment. The index closed at 5,074.08 Friday, having suffered the seventh-worst week in the last 25 years, a decline of more than 9%. The S&P 500 was down nearly 5% in early trading Monday. “Valuations also offer better support at that price so investors should be prepared for another 7-8% potential downside from Friday’s close if there is no line of sight to a less severe trade environment and the Fed remains firmly on hold,” Morgan Stanley’s analysts wrote. Trump so far has shown no signs of backing down from the tariffs, while Fed officials have elected to keep their key interest rate steady. Fed Chair Jerome Powell said Friday that Trump’s larger-than-expected tariffs could stoke inflation and slow economic growth. -Nisha Gopalan and David Marino-Nachison

Bitcoin Price Levels to Watch as Cryptocurrency Slides Bitcoin (BTCUSD) dropped below the closely watched $80,000 level on Monday amid intensifying worries about the impact of tariffs. The digital currency was at $77,400 recently, down from around $84,000 on Friday afternoon and trading at its lowest levels since November, as investors steer clear of risky assets. After falling below the 200-day moving average (MA) last month, bitcoin’s price consolidated within a rising wedge before breaking down below the bearish pattern in late March, signaling a continuation move lower. Source: TradingView.com. Indeed, the cryptocurrency’s price has continued its downtrend, with declines accelerating on Sunday evening after a brief period of sideways drift. It’s also worth pointing out that the 50-day MA has crossed below the 200-day MA to form an ominous death cross, a chart pattern that warns of further selling. Investors should watch key support levels near $74,000, $65,000, and $57,000, while also monitoring a major overhead area near $87,000. Read the full technical analysis piece here. -Timothy Smith

Newly manufactured cars of the automobile maker Subaru awaiting export are parked at a port in Yokohama, south of Tokyo, Japan March 27, 2025. REUTERS/Issei Kato/File Photo Purchase Licensing Rights , opens new tab

Summary

Companies Japan March factory output -1.1% vs f’cast -0.4%

Production environment remains highly uncertain, government says

U.S. tariffs rattle Japanese manufacturers, including auto

TOKYO, April 30 (Reuters) – Japan’s factory output fell more than expected in March, dragged down by its key motor vehicles industry, as U.S. President Donald Trump’s tariff policies rattle manufacturers and a whole host of industries globally.

Japan’s trade negotiator Ryosei Akazawa will be heading to the United States on Wednesday to meet his counterparts for a second round of tariff negotiations.

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Industrial output fell 1.1% in March from the previous month when it rose 2.3%, worse than a median market forecast for a 0.4% fall, the Ministry of Economy, Trade and Industries (METI) data showed.

While manufacturers surveyed by the ministry expect seasonally adjusted output to increase 1.3% in April and climb 3.9% in May, a METI official cautioned that it is too early for optimism.

“The environment surrounding production remains highly uncertain,” the official said.

Motor vehicle production was down 5.9% in March from the previous month, the METI said. Specifically, regular passenger car output fell 4.1% in March because of lower exports, while small vehicle production slumped 23.2% on auto part supply disruption.

Trump introduced a 25% tariff on car and truck imports and announced a 24% tariff on all Japanese goods, though the latter was subsequently slashed to 10% for 90 days. The sweeping U.S. tariffs are rattling Japan’s industrial supply chains, particularly for automobiles, the country’s biggest export item.

Japan exported 21 trillion yen ($147.45 billion) worth of goods to the United States last year, with automobiles representing roughly 28% of the total.

The METI official said manufacturers expressed their concerns about U.S. tariffs though the government isn’t aware of any changes in their production plans.

Still, Japanese companies are worried Trump’s protectionist policies would spark a broader global slowdown.

Top Japanese construction machinery maker Komatsu (6301.T) , opens new tab on Monday forecast a 27% decline in operating profit this financial year due to a stronger yen and new U.S. tariffs which will have an impact of more than $650 million.

Separate data showed Japanese retail sales rose 3.1% in March from a year earlier, slightly less than the median market forecast for a 3.5% rise.

($1 = 142.4200 yen)

Reporting by Satoshi Sugiyama; Editing by Jacqueline Wong and Shri Navaratnam

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A row of residential houses stands in Queens’ neighborhood of Ridgewood, New York, U.S., September 16, 2022. REUTERS/Amr Alfiky/File photo Purchase Licensing Rights , opens new tab

Summary

Companies Consumer sentiment drops to nearly three-year low in May

Inflation expectations soar due to tariffs

Single-family housing starts hit nine-month low in April

Import prices rise 0.1% in April, driven by capital goods

WASHINGTON, May 16 (Reuters) – (This May 16 story has been corrected to clarify that the company name is RSM US, not RMS US, in paragraph 14)

U.S. consumer sentiment deteriorated further in May, with one-year inflation expectations soaring to levels last seen in late 1981 amid escalating fears over the economic impact of President Donald Trump’s trade policy

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The University of Michigan’s Surveys of Consumers on Friday showed a significant decline in morale among Republicans, suggesting that even Trump’s base was becoming concerned with the president’s sweeping tariffs, which this week led retail giant Walmart to warn that it would start raising prices at the end of month because of increased costs from import duties.

It was the first time that sentiment dropped among Republicans since Trump’s November 5 electoral victory. The continued slump in overall sentiment and jump in inflation expectations suggested a retrenchment in consumer spending was probably underway that could temper economists’ expectations for a rebound in economic growth this quarter.

This is a line chart that shows the monthly consumer sentiment index by political party. In the month of May, the outlook of Democrats was 33.9, the outlook of Republicans was 84.2 and the outlook of independents was 48.2.

The economy contracted in the first quarter for the first time in three years amid a flood of imports as businesses tried to beat the higher costs associated with tariffs. Retail sales were almost flat in April.

“The consumer is plainly worried and reading between the lines it is not just price increases that are worrying, it is the fact that many goods may be impossible to find as the reduction in port activity means shortages could develop within months,” said Christopher Rupkey, chief economist at FWDBONDS.

“The outlook continues to darken and one wonders how long this can continue before the economy actually slips over the edge into recession.”

The University of Michigan’s consumer sentiment index dropped to 50.8 this month, the lowest level since June 2022, from a final reading of 52.2 in April. Economists polled by Reuters had forecast the index would rise to 53.4.

Sentiment dropped 7% among Republicans, offsetting an improvement among independents. The mood remained gloomy among Democrats.

The survey was conducted between April 22 and May 13, wrapping up two days after the U.S. and China de-escalated their trade war. Duties on Chinese imports were slashed to 30% from 145% for 90 days as part of the deal reached last weekend by Washington and Beijing.

The University of Michigan said the initial reaction mirrored the minor improvement in sentiment seen following the delayed implementation in April of Trump’s country-specific duties until July.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” said Joanne Hsu, the Surveys of Consumers director. “Consumers continue to express somber views about the economy.”

Consumers’ 12-month inflation expectation soared to 7.3%, the highest level since November 1981, from 6.5% in April. Both Democrats and Republicans anticipated higher near-term inflation. The jump pointed to higher prices in the months ahead despite benign consumer prices in April, which economists attributed to businesses still selling inventory accumulated ahead of tariffs.

A line chart titled “Inflation expectations of US consumers” that tracks the metric over five years.

PRICE HIKES LOOMING

Auto manufacturers also have announced price increases, and economists expect inflation to pick up by the middle of this year. Long-run inflation expectations increased to 4.6% in the University of Michigan data, the highest level since March 1991, from 4.4% in April amid a large jump among Republicans. Rising inflation expectations could complicate matters for the Federal Reserve as it weighs its next monetary policy move.

“The key idea to remember here is that inflation expectations are the primary transmission mechanism, along with external retaliation, that turns tariffs into a sustained increase in the price level or inflation,” said Joseph Brusuelas, chief economist at RSM US. “The idea that the Federal Reserve is going to hike rates anytime soon should be summarily dismissed.”

Fed Chair Jerome Powell warned on Thursday that “we may be entering a period of more frequent, and potentially more persistent, supply shocks – a difficult challenge for the economy and for central banks. The U.S. central bank left its benchmark overnight interest rate in the 4.25%-4.50% range earlier this month

Higher inflation was flagged in a separate report from the Labor Department’s Bureau of Labor Statistics that showed prices for imported capital goods jumped 0.6% in April, while those of consumer goods excluding motor vehicles increased 0.3%. Overall import prices, which exclude tariffs, gained 0.1% after falling 0.4% in March. The reading confounded economists’ expectations for a 0.4% decline.

Import export prices and the dollar

“Our tariff pass-through analysis indicates that costs are still largely being borne by U.S. importers,” said Pooja Sriram, an economist at Barclays. That is at odds with the White House’s narrative.

Tariffs are also weighing on activity in the housing market.

A separate report from the Commerce Department’s Census Bureau showed single-family housing starts, which account for the bulk of homebuilding, dropped 2.1% to a seasonally adjusted annual rate of 927,000 units last month, the lowest level in nine months. Permits for future construction of single-family housing declined 5.1% to a rate of 922,000 units, suggesting the weakness might persist. There is also a glut of unsold new homes on the market.

Indeed, a National Association of Home Builders survey on Thursday showed sentiment among single-family homebuilders plunged to a 1-1/2-year low in May, with 78% of builders reporting “difficulties pricing their homes recently due to uncertainty around material prices.”

“Builders are hitting the brakes this year in response to high uncertainty for costs and future demand,” said Ben Ayers, a senior economist at Nationwide. “We expect starts to fade further over the summer as conditions remain challenging for builder profitability.”

Housing starts and building permits

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Nick Zieminski and Paul Simao

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Summary

Companies Musk to reduce time on government work, increase time on Tesla

Tesla faces uncertainty from tariffs and shifting global trade policies

Tesla’s auto revenue drops 20%, net profit falls 71% in Q1

Production ramp of affordable cars to be slower than expected – exec

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“The large slog of work necessary to get the DOGE team in place and working with the government to get the financial house in order is mostly done,” Musk told analysts on a conference call. But he said he still intended to spend some 40% of his time on DOGE.

Tesla shares, which had risen 4% in after-hours trading right before an earnings conference call began, spiked to trade up 5.5% on Musk’s comments. The stock has nearly halved from its December peak.

After market close on Tuesday, Tesla reported profitability for its core auto business that topped rock-bottom expectations and said it was on track to produce an affordable car.

But the EV maker said it would have to reassess its growth forecast in three months because it was “difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains” and that “changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” it said.

Musk, who said on Tuesday he continued to support lower tariffs, added that Tesla was not immune to “macro demand for cars,” adding that economic uncertainty causes people to want to “pause on doing a major capital purchase like a car.”

“Absent the macro issues, we don’t see any reduction in demand,” he said. But tariffs will have an outsized impact on Tesla’s energy business, he said.

While the stronger-than-expected margin in the first quarter – driven by lower costs – offered some relief, Tesla’s auto revenue still slumped by a fifth in the period, and net profit plunged 71%. These metrics both missed Wall Street estimates.

A chart showing the difference between Tesla’s Q1 2025 results and analysts’ expectations

Musk acknowledged the blowback on the company, but brushed off concerns about brand damage hurting Tesla’s first-quarter sales.

ROBOTAXI ON TRACK

Tesla electric vehicles are lined up at a dealership in Durango, northern Spain, October 30, 2023. REUTERS/Vincent West/File Photo Purchase Licensing Rights , opens new tab

Musk’s recent posts on his social media site X have suggested he is slowly re-engaging with his businesses, after spending months talking only about how he was cutting government waste. But his time away from DOGE will be split between money-maker Tesla and his other companies which include SpaceX, xAI and Neuralink.

“I think more attention by Musk on Tesla is a net positive for the stock, but to see a meaningful move in the stock we would need to see a headline more like ‘Musk to leave DOGE to refocus on Tesla,'” said Shawn Campbell, adviser and investor at Camelthorn Investments, who personally holds Tesla shares.

Tesla has said it plans to release a cheaper car – seen as a key catalyst for future growth – in the first half of 2025, using existing platforms and assembly lines, after scrapping plans for a brand-new, low-cost model.

Tesla in its release said the launch of affordable cars was on track for the first half of the year. “The ramp might be slower than we had hoped initially,” Lars Moravy, the vice president for engineering, said on the call, but that there was nothing blocking Tesla from starting production within the publicized timeline.

“The models that come out in the next months will be built on our lines and will resemble in form and shape the cars we currently make. The key is they’ll be affordable and you’ll be able to buy one,” Moravy added.

Reuters reported last week that sources said Tesla’s long-awaited plans for an affordable car include a U.S-made, stripped-down version of its best-selling electric SUV, the Model Y, but the production launch will be delayed by a few months.

Tesla also said the launch of a robotaxi fleet in Austin, Texas, in June remained on track. The company has been seeking regulatory approvals to that end, but there are serious concerns about safety and related litigation risks that could come with deploying unproven driverless technology on public streets.

Asked about when robotaxi production would ramp up, Musk said he expected millions of Teslas operating fully autonomously by the second half of next year.

Automotive gross margin for the first quarter, excluding regulatory credits, fell to 12.5% from 13.6% in the fourth quarter, according to Reuters calculations, compared with expectations of 11.8%, according to 21 analysts polled by Visible Alpha.

The electric vehicle maker reported revenue of $19.34 billion for the January-March quarter, compared with estimates of $21.11 billion, according to data compiled by LSEG.

Tesla’s quarterly revenue drops the most in at least five years

Tesla reported earlier this month that deliveries in the January-March period slid 13%. Analysts expect a second straight annual decline in Tesla deliveries in 2025, despite efforts to boost sales through incentives like free charging and Full Self-Driving features.

A line chart showing the percentage change of Tesla stock vs. the S&P 500 over the past year

Tesla’s automotive profitability set to slump to lowest on record – Analysts expect automotive gross margin to slide on lower sales volumes, incentives to boost sales

Reporting by Akash Sriram in Bengaluru, Abhirup Roy in San Francisco and Chris Kirkham in Los Angeles; Additional reporting by Hyunjoo Jin in Seoul; Writing by Sayantani Ghosh; Editing by Peter Henderson, Devika Syamnath and Matthew Lewis

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Summary

Companies Trump threatens to increase tariffs on China

European Commission propose counter-tariffs of 25% some US goods

Goldman Sachs, Citi and Morgan Stanley cut oil price forecasts

Saudi crude prices for Asian buyers reduced to four-month low

NEW YORK, April 7 (Reuters) – Oil prices slid 2% to a near four-year low on Monday on worries U.S. President Donald Trump’s latest trade tariffs could push economies around the world into recession and reduce global demand for energy.

Brent futures fell $1.37, or 2.1%, to settle at $64.21 per barrel, while U.S. West Texas Intermediate crude futures fell $1.29, or 2.1%, to settle at $60.70.

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That pushed both crude benchmarks, which fell about 11% last week, to their lowest closes since April 2021.

The session was marked by extreme volatility with intraday prices down more than $3 a barrel overnight and up over $1 Monday morning after a news report said Trump was considering a 90-day pause on tariffs. White House officials quickly denied the report, sending crude prices back into the red.

Confirming investor fears that a full-blown global trade war has begun, China, the world’s second-biggest economy behind the U.S., said on Friday it would impose additional levies of 34% on American goods in retaliation for Trump ‘s latest tariffs.

Trump responded that the U.S. would impose an additional 50% tariff on China if Beijing does not withdraw its retaliatory tariffs on the U.S., and said “all talks with China concerning their requested meetings with us will be terminated.”

The European Commission , meanwhile, proposed counter-tariffs of 25% on a range of U.S. goods on Monday in response to President Donald Trump’s tariffs on steel and aluminum, a document seen by Reuters showed.

Goldman Sachs forecast a 45% chance of recession in the U.S. over the next 12 months, and made downward revisions to its oil price projections . Citi and Morgan Stanley also cut their Brent outlooks. JPMorgan said it sees a 60% probability of recession in the U.S. and globally.

A pumpjack operates at the Vermilion Energy site in Trigueres, France, June 14, 2024. REUTERS/Benoit Tessier/File Photo Purchase Licensing Rights , opens new tab

In addition to growing recession worries, there are growing concerns that the Trump administration’s policies will cause the price of goods to increase.

U.S. Federal Reserve Governor Adriana Kugler said some of the recent rise in goods and market-services inflation may be “anticipatory” of the effect of the Trump administration’s policies, adding that it is a priority for the Fed to keep inflation in check.

The Fed and other central banks use higher interest rates to combat inflation. Higher interest rates, however, boost consumer borrowing costs and could cause economic growth and oil demand to decrease.

SUPPLIER REACTION

Saudi Arabia on Sunday announced sharp cuts to crude oil prices for Asian buyers, dropping the price in May to the lowest level in four months.

“It’s a demonstration of the belief that tariffs will hurt oil demand,” said PVM analyst Tamas Varga. “It goes to show the Saudis, just like every man and his dog, expect the supply and demand balance to be affected and they are forced to cut their official selling prices.”

Adding to the downward momentum, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and its allies decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.

During the weekend, OPEC+ ministers emphasised the need for full compliance with oil output targets and called for over-producers to submit plans by April 15 to compensate for pumping too much.

Reporting by Scott DiSavino in New York, Anna Hirtenstein and Robert Harvey in London; additional reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo. Editing by David Goodman, Mark Potter, Rod Nickel and Nick Zieminski

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