It could be a challenging week for the markets.
April is historically the best month for the stock market, averaging a return of 1.6% since 1945 – the highest of any month, along with December.
But this April could be challenging, as it is set to begin with a U.S. tariff regime starting this week, April 2. U.S. President Donald Trump has called April 2 “Liberation Day,” referring to a rebalancing of trade policies with its partners.
While the Trump administration has already levied higher tariffs on China, as well as autos, steel and aluminium, the broader tariff policy is set to begin Wednesday.
At first, it was thought that 25% tariffs would go into effect for Canada and Mexico, but Trump told reporters over the weekend, “You’d start with all countries.”
White House economics adviser Kevin Hassett clarified things a bit, saying that the tariffs would be on 10 to 15 countries that have the worst trade imbalances with the U.S., according to NBC News. An analysis by Newsweek suggests that those countries with the worst trade imbalances include most countries in Europe, China, Canada, Mexico, and India.
However, no announcements on tariffs have been made, as of Monday. Further, no countries have yet been listed as targets, outside of Canada, Mexico, and China.
The companies that import goods from overseas pay the tariffs. Typically, they pass the extra costs on to customers via higher prices. This is why economists are concerned that tariffs could increase inflation and slow the U.S. economy. The longer-term goal of the Trump administration is to bring back manufacturing to the U.S. because products made in the U.S. won’t face the import tariffs.
Ultimately, they say, that will boost the economy. It may happen over time, but in this current environment, the markets have been opposed to the tariffs. The Nasdaq has entered correction territory, down 12% year-to-date, while the S&P 500 has fallen 6%
Jobs' Reports and Powell's Speech
On Monday, stocks opened lower across the board as investors are selling off stocks before the tariffs kick in. The Nasdaq was down about 365 points, or 2.2%, while the S&P 500 was down about 60 points or 1%. The Dow had shed about 170 points, or 0.4%.
The potential double whammy for investors is the March jobs report due this week. The ADP employment report, which focuses on private sector jobs, comes out Thursday morning, and economists target 120,000 new jobs, up from 77,000 the previous month.
Then on Friday, the Bureau of Labor Statistics issues the unemployment report for March. The previous month, job growth came in lower than expected. It was in part due to massive federal job cuts related to the Elon Musk-led DOGE reviews. Roughly 172,000 jobs were slashed in February, the most in five years.
With DOGE cuts continuing and economic growth expected to be low, according to economists, investors will be closely watching the jobs reports.
Finally, Jerome Powell, the chairman of the Federal Reserve, is speaking Friday at the annual conference of the Society for Advancing Business Editing and Writing (SABEW) Annual in Arlington, Virginia. He may provide some commentary on the week that was, particularly on tariffs and jobs.