TLDR:
- Trump’s new tariffs scheduled to begin Wednesday, with China imposing 34% retaliatory tariffs Thursday
- S&P 500 has plunged 17% from February highs in worst weekly performance since March 2020
- March inflation figures releasing Thursday will be crucial for understanding economic impact
- Major financial institutions including JPMorgan Chase report earnings Friday
- Fed meeting minutes and multiple economic indicators expected to provide market direction
The financial world stands on edge this week as the United States prepares to implement sweeping new tariffs announced by President Donald Trump, with China’s counter-measures set to follow a day later. These developments come amid sharp market declines and ahead of key economic reports that could shape investor sentiment.
Trump’s tariff plan, unveiled last week, includes a 10% levy on all imported goods, higher rates for certain countries, and a 34% tariff specifically targeting Chinese imports. This policy, described by the president as the “Liberation Day” tariffs, will take effect Wednesday.
China wasted no time responding, announcing Friday that it would impose matching 34% tariffs on all U.S. goods starting Thursday. The retaliatory measure affects approximately $140 billion worth of American exports to China based on 2024 trade figures.
Markets have reacted harshly to these announcements. The S&P 500 has fallen 17% from its record close in February, marking its steepest weekly decline since the early pandemic period of March 2020. All three major U.S. indexes closed sharply lower on Friday, continuing a multi-day slide.
Techincal Analysis
According to analyst Trader Edge, the S&P 500 ($SPX) is approaching a key support zone between $4950 and $4800, coinciding with a major trendline going back to March 2020. With the weekly RSI in oversold conditions, a strong bounce from this level is possible.
The S&P 500 $SPX is nearing an important support zone around $4950-4800, aligning with a major trendline from March 2020.
With an oversold weekly RSI, we could see a decent bounce from this area 📊$SPY $ES pic.twitter.com/1DHuNWNrYN
— Trader Edge (@Pro_Trader_Edge) April 6, 2025
Key Economic Indicators
This week’s economic calendar features several critical data points that could reveal how the economy is performing as tariffs take effect. Most notably, the March Consumer Price Index (CPI) will be released Thursday, offering the latest snapshot of inflation trends.
Economists anticipate the March CPI will show a 2.6% year-over-year increase, down from February’s 2.8% reading. However, some analysts warn that anticipatory buying ahead of tariff implementation may have pushed prices higher in March.
Wednesday brings the release of minutes from the Federal Reserve’s March meeting. These notes will provide insight into how central bank officials view economic conditions and their thinking on interest rate policies amid trade tensions.
The Producer Price Index (PPI), which measures wholesale inflation, will be published Friday. This figure often signals future consumer price movements and will be watched for early signs of tariff impacts on the supply chain.
Consumer sentiment data, also due Friday, will include expectations for future prices that often influence spending patterns. Small business sentiment figures on Tuesday will show how business owners are reacting to the changing economic landscape.
First Quarter Earnings Season Begins
Friday marks the start of the first-quarter earnings season with reports from several major financial institutions. JPMorgan Chase will lead the pack, with investors watching to see if the bank can maintain the momentum from last quarter’s strong performance in investment banking and net interest income.
BlackRock will also report Friday, following a record quarter for assets under management. Market watchers will seek updates on the asset manager’s $30 billion artificial intelligence infrastructure project with tech giants Microsoft, Nvidia, and Elon Musk’s xAI.
Wells Fargo rounds out Friday’s financial reports. The bank topped profit estimates last quarter but fell just short on revenue targets.
Earlier in the week, several other companies will announce results. Delta Air Lines reports Wednesday after recently lowering quarterly projections due to softening travel demand. Levi Strauss will report Monday amid warnings about challenging market conditions affecting 2025 sales.
Cal-Maine Foods, a major egg producer that has benefited from higher prices during avian flu outbreaks, reports Tuesday. Other notable announcements include RPM International on Tuesday, Constellation Brands on Wednesday, and CarMax on Thursday.
Market Recovery Prospects
The path to market recovery appears dependent on two key factors: trade negotiations and monetary policy signals. Any indication that the U.S. and its trading partners are working toward compromise could boost investor confidence.
Trump told reporters Friday he remains open to negotiations depending on trading partners offering favorable terms to the United States. Market strategists suggest quick progress on this front could help stabilize declining markets.
“If we see countries come to the negotiating table in the near-term and tariff rates are reduced, that would likely help alleviate some of the pressure,” noted Mike Wilson, Morgan Stanley’s chief U.S. equity strategist. He added that prolonged high tariff rates would increase recession risks.
The Federal Reserve’s response to these developments will also shape market direction. The central bank faces a difficult balancing act if inflation remains elevated while economic growth slows due to tariff impacts.
Several Fed officials will speak publicly this week, including Chicago Fed President Austan Goolsbee and New York Fed President John Williams. Their comments on inflation trends and economic conditions will be closely analyzed for hints about future interest rate decisions.
For investors navigating this uncertain environment, clarity on either trade policy developments or central bank intentions could provide much-needed guidance through the market turbulence ahead.
