S&P 500 Daily Update for Friday April 4, 2025

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The stock market experienced a significant downturn, the largest single-day drop since the COVID crash. This was triggered by President Trump's announcement of sweeping tariffs, effective from April 5th, with higher rates on specific countries starting April 9th (e.g., 34% on top of 20% for China, 24% for Japan, 46% for Vietnam, 26% for India, and a potential 20% for the EU). The market reaction was immediate and negative, with futures dropping 3.5% after the Close on Wednesday and stayed negative before the Open. Declines continued throughout the day, closing at the intraday low of 5398 (S3), down 4.84% on high volume, below the 5,400 level.
Despite the sharp decline, internal market indicators suggest more rotation than outright money exiting, with value holding up better than growth. Sentiment is extremely negative, with the VIX spiking above 30 to 30.02, indicating heightened fear. Short and intermediate-term trends remain negative, while the long-term trend is mixed but showing damage, with the 50-period moving average approaching a potential bearish crossover.
Economic data provided mixed signals: initial jobless claims were better than expected at 219,000 (vs. 224,000 forecast), but continuing claims are rising, suggesting slower re-employment. The ISM Services PMI was above 50 at 50.8 but below expectations (53.2), indicating slight expansion but weakness. The trade balance improved slightly to -122.7 billion, possibly due to tariff front-running.
Sector performance was broadly negative, with tech (-6.96%), discretionary (-6%), and communication (-4.45%) hit hardest, while staples (+0.66%) was the only positive sector, reflecting a defensive shift. Small caps dropped 6.6%, and large caps such as Apple (-9.25%), Amazon (-8.95%), and Nvidia (-7.81%) saw significant declines. Bonds saw a flight to safety, with the 10-year yield dropping to 4.06% from 4.2%, and the dollar weakened to the 101 range.
Technical indicators are overwhelmingly negative, with momentum oscillators (e.g., RSI, Stochastic) at extreme levels, suggesting oversold conditions that could persist. The market is down 12.27% from its February 19th high, entering correction territory (10%+ decline). During times like this, the emphasis should be relying on charts over media opinions, noting that while oversold, a bounce isn’t guaranteed without evidence of buying support. Friday’s employment report and Fed Chair Powell’s speech are key upcoming events, amid ongoing focus on tariff impacts. Seasonality slightly favors a positive April 4th, but the outlook remains cautious.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1-EPrskZAR9dx2-YC49j8eGVh14sjzad-/view?usp=sharing

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DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!