Market Pulse with Dan Sheehan

Good Morning Investors,

Markets are unraveling again this morning as the global trade war turns bilateral. China has responded in kind, slapping 34% tariffs on all U.S. imports—mirroring the Trump administration’s move earlier this week. That tit-for-tat escalation has sent markets reeling for a second day, amplifying recession fears and dragging everything from oil to tech stocks deeper into the red.

Futures were under heavy pressure before the bell, with Dow Jones contracts down over 1,400 points (-3.3%), S&P 500 futures off 3.5%, and Nasdaq 100 contracts lower by nearly 4%. Tech names with China exposure are again leading the decline, while bank shares are collapsing globally—Japan’s banking index posted its worst weekly performance in four decades.

MARKET FRAMEWORK

China’s announcement of 34% tariffs on U.S. goods hits just two days after the U.S. imposed equivalent tariffs on Chinese imports, formalizing a bilateral trade war with direct consequences for global growth. Risk assets sold off aggressively as the reality of entrenched protectionism takes hold. Apple fell another 5% in the premarket, and Nike, Qualcomm, and Tesla each posted losses of 4–6%.

Bank stocks are under renewed pressure. Japan’s financial sector just recorded its steepest weekly loss in over forty years, and U.S. banks are now being dragged into the storm. Morgan Stanley, Goldman Sachs, JPMorgan and Citigroup are all down 4–6% in premarket trading.

Energy markets haven’t escaped the damage. WTI crude is down 8% to $61, marking its lowest level since 2021. This follows Thursday’s 6% drop, sparked by fears that global trade friction will erode oil demand just as OPEC+ increases output.

It’s important to note: I do not believe the selling has run its course. The price action lacks the volume-driven capitulation that typically signals a bottom, and until we have clarity on the scale and duration of tariffs—and a clearer pivot from the Fed—markets will remain vulnerable to additional downside. This remains consistent with the roadmap I outlined in March: the administration seeks to drive down the 10-year yield to refinance debt, then potentially unwind tariffs in Q3/Q4 to stimulate markets. This is a growth scare, not a recession—though recession risks are clearly rising.

ECONOMIC FRAMEWORK

Friday’s nonfarm payrolls report will be a crucial test of the underlying strength of the economy before the full impact of the tariffs hits. The Street expects 135,000 jobs in March and an unemployment rate holding at 4.1%. Any sign of material softness could amplify the Fed’s urgency to cut rates, especially with Powell speaking later today amid heightened volatility.

Wednesday’s JOLTS report already showed softening in job openings. Now we’ll see if those leading indicators translate into broader payroll weakness. I’ll be watching wage growth closely—if that cools alongside job gains, we could see bonds rally even further and inflation concerns ebb.

CORPORATE FRAMEWORK

Corporate America is shifting rapidly to adapt. Ford is slashing prices to drive domestic sales, Apple faces a potential 43% price hike on new iPhones if tariffs stick, and Boeing is again under FAA scrutiny after a cabin fire report. Stellantis has already paused production across multiple facilities in North America.

Meanwhile, Amazon, AppLovin, and a consortium led by OnlyFans’ founder are making late-stage bids for TikTok, which faces a U.S. ban by April 5 unless a non-Chinese buyer is found. In energy, Exxon pre-announced stronger Q1 earnings thanks to margin strength, while oil prices cratered on demand fears, with WTI below $61 and Brent under $65—the lowest levels since 2021.

GLOBAL CONTEXT

The global reaction to tariffs has been severe. European stocks are now officially in correction territory, with the Stoxx 600 sliding another 2.2%. Japan’s Nikkei is down 8% for the week, the steepest fall since March 2020. Meanwhile, the VIX has spiked above 39—the highest reading since last summer’s yen carry trade unwind.

Bond markets are flashing warning signals. The 10-year U.S. Treasury yield falling below 4% is a loud tell that investors are shifting heavily into defensive positioning. While gold slipped from record highs on profit-taking, it remains on track for its fifth consecutive weekly gain.

SECTOR STRATEGY

Tech is under pressure, but I continue to monitor the energy sector closely. From a technical standpoint, energy stocks are coiled near a multi-year breakout level after a long consolidation. The recent pullback in oil prices, ironically, could create the kind of oversold condition that leads to a strong reversal—especially if the White House signals any backtracking on energy tariffs or if OPEC+ moderates output. This remains one of the most interesting tactical opportunities on the radar.

STRATEGIC OUTLOOK

We’re in a volatility regime, and that’s unlikely to change in the short term. The combination of falling yields, aggressive pricing of Fed cuts, and a probable tariff unwind later this year still supports a constructive second-half outlook. The Trump Put remains intact. This is his 2018 playbook—escalate first, then negotiate—and unless markets completely break, I expect him to repeat the pivot. Likewise, the Fed Put is now active, with Powell in a difficult spot today as he tries to balance inflation credibility with clear market fragility.

That said, I do not believe the selloff is over. The current price action lacks the kind of volume-driven capitulation that typically marks a bottom, and I continue to expect further downside in the near term. Until there’s greater clarity on the scope and duration of tariffs—and a tangible shift in Fed posture—markets will remain vulnerable to additional shocks. Managing risk remains paramount.

Importantly, this aligns with the scenario I laid out in March, where I suggested the administration would aim to drive down the 10-year yield to refinance debt more cheaply, then potentially walk back tariffs in Q3/Q4 to stimulate equity markets. That roadmap still holds. I continue to view this as a growth scare, not a recession. The risks are rising, yes, but this is not my base case.

ANALYST RECOMMENDATIONS

CLOSING THOUGHT

A policy-induced selloff always brings confusion, but clarity will return. For now, markets are processing the shock. But the fundamental supports of the U.S. economy—strong employment base, resilient consumer, and policy flexibility—have not yet given way. If yields continue to fall and job growth merely slows (rather than collapses), this may prove to be a moment of maximum fear rather than fundamental breakdown. I remain cautious in the short term but optimistic on a second-half recovery path—if tariffs become the opening move to eventual negotiation rather than a long-term fixture. I’m also watching the energy sector closely here for signs of relative strength.

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.