Good Morning Investors,
Markets are entering Wednesday on a defensive footing, but my message remains consistent: volatility is the toll you pay for long-term opportunity. We’re seeing signs that the worst of the tariff panic may be behind us, even if headline noise continues. If you’ve been following the newsletter over the past few weeks, you’ll know I’ve been encouraging long-term entries into quality stocks. This correction has offered that window.
Roughly 15% of the S&P 500 is now trading below its 200-day moving average — historically a strong contrarian signal. The VIX breached 50 last week, another rare but reliable buy indicator. Taken together, these measures imply we’re nearing a bottoming phase. Not a V-shaped rebound, but a reaccumulation zone for investors with patience.
The peak fear moment was likely tariff day. Since then, while price action remains jumpy, the market is showing signs of resilience. We’re not out of the woods — I expect continued swings in both directions — but with inflation cooling (shelter inflation in particular), and the Fed under no pressure to act hastily, the foundation for a recovery is being laid.
And let’s be clear: US exceptionalism is not over. While some market narratives have drifted toward global rotation, I still believe the best companies — and the best shareholder returns — will come from US firms. The dollar isn’t weak enough to flip that script. Leadership may rotate within the US, but I wouldn’t bet against American innovation.
In short: this is a growth scare, not a full-blown recession. My base case remains intact: volatility in Q2, but upside potential in the second half as tariffs are restructured, Fed policy remains optional, and fiscal reform comes back into focus.
BEFORE THE BELL
US futures are lower this morning, with tech under pressure following a brutal warning from Nvidia and a disappointing update from ASML. S&P 500 futures are down 0.8%, Nasdaq off 1.5%, while the Dow is holding near flat. Gold pushed above $3,300 as safe haven demand accelerates, and the dollar slipped against the euro and franc. Oil prices rose modestly on hopes for China-US trade thawing, even as broader risk appetite faded.
March retail sales and industrial production data are due today, with Fed Chair Powell also expected to speak — all of which could shape near-term sentiment. The market is still digesting the full ramifications of Nvidia’s export woes and the widening implications of the White House’s evolving tariff framework.
STOCKS TO WATCH
Nvidia (NVDA): The chipmaker said it will take a $5.5 billion charge tied to export restrictions on its H20 AI chips to China. The announcement stunned investors, with shares down over 6% in premarket and dragging the entire chip sector with it. This reinforces how central Nvidia’s China exposure has become and highlights the fragility of global supply chains.
ASML (ASML): Shares slumped after the Dutch chip equipment giant missed booking estimates and flagged tariff-related uncertainty as a risk to 2025–26 visibility. While ASML stood by its annual guidance, markets reacted to the softer-than-expected outlook.
Tesla (TSLA): Plans to import key Cybercab and Semi components from China have been suspended due to new tariffs. This may delay production milestones, though Tesla has yet to confirm revised timelines.
United Airlines (UAL): Forecasted a weaker-than-expected profit for the current quarter, citing recession risk. Still, shares rose in premarket trading after the company noted strong forward bookings.
Alphabet (GOOGL): Facing a $6.6 billion UK class action over alleged abuse of search dominance. Google dismissed the claim as speculative, but the case will add to regulatory overhang.
CORPORATE HEADLINES
KKR will acquire Datagroup in a $508 million deal, continuing its M&A streak in European tech.
Interpublic–Omnicom merger expected to close in H2, with revenue synergies cited despite a weak Q1.
Pfizer and Novo Nordisk targeted in Trump’s updated drug pricing executive order.
Harley-Davidson boardroom battle escalates, with H Partners seeking to oust three directors including CEO.
ANALYSTS’ RECOMMENDATIONS
Nvidia: Piper Sandler cuts target to $150 from $175 on export restrictions.
Tesla: Piper Sandler trims target to $400 from $450 citing weaker deliveries.
Bank of America: Piper Sandler lowers target to $42 from $45 amid weaker equity valuations.
Citigroup: RBC cuts target to $78 from $85, citing profitability risks.
Xylem: Stifel lowers to $140 from $150, factoring in tariff uncertainty.
STRATEGIC OUTLOOK
I continue to frame this market as a high-volatility bottoming formation. That means sharp drawdowns and sharp rallies — don’t get whiplashed by either. The presence of extreme fear, oversold breadth, and peak uncertainty typically aligns with forward 12-month outperformance.
The Fed has optionality again. With inflation drifting back toward target and shelter inflation leading the way lower, there is no urgency to raise — but equally, no obligation to cut prematurely. This gives Powell space to react to incoming data without being boxed in.
Geopolitically, Scott Bessent’s comments on concessions from Asian countries suggest there’s a path forward on tariff moderation. The formation of a united front on trade — if executed cleanly — could stabilize policy risk and set the stage for second-half fiscal catalysts.
The coming weeks may still bring noise. But for investors with a long view, now is the time to build positions in companies you wanted six months ago — now trading at better multiples. As hedge funds begin to disclose their moves, don’t be surprised to see many buying the very names they’ve been talking down.
Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.
Dan Sheehan [email protected]
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.