by Jade Thomason
Vice President Equity and Fixed Income Trading
Good Friday is always a welcome surprise for those of us in financial services– a (hopefully) sunny day where we can enjoy the spring weather and get an early start to the weekend. For those of you who celebrate Easter or Passover, we wish you a wonderful weekend filled with family, friends and festivities! Despite the shortened week, there was enough excitement in the markets to keep even the most veteran of investors on their toes. The erratic volatility seen in capital markets last week has somewhat subsided, but there is no shortage of news to keep investors guessing about what’s to come. Two of the world’s largest companies, Apple and Nvidia, were impacted by the latest tariff policy, and Powell’s comments regarding the economy sent stocks tumbling.
Last weekend, news broke of a tariff exemption for smartphones, laptop computers and other electronics imported from China – a welcome reprieve for consumers and tech companies. The tariffs announced on April 2, which were further increased the following week, have a large impact on the companies that manufacture and sell these products, namely Apple. Prior to last weekend’s news, Apple’s stock was down 12% from where it was prior to the tariff announcement; the exemption announcement led to a 4% jump on Monday. This exemption helped ease the pressure Apple is under to diversify its manufacturing base, but they are not out of the woods. China has strong competitive advantages in manufacturing which is why Apple, and nearly all its tech hardware peers, outsource most of their production there. President Trump has stated “nobody is getting off the hook” on tariffs, so Apple knows this is likely short-lived.
There isn’t a week that goes by when Nvidia doesn’t make the headlines, and this week is no exception. Nvidia shares dropped 7% on Wednesday due to a disclosure stating the U.S. will now require a license for exporting the company's H20 processors to China and other countries. This is in addition to U.S. export controls that limit sales of advanced AI processors to Chinese customers that Nvidia already accounted for when developing the H20 chip. The inability to sell even an older generation chip into the Chinese market shows how the trade war could impact its business. According to the U.S. government, the new requirement would be in place “indefinitely,” and first quarter results will include a $5.5 billion charge “associated with H20 products for inventory, purchase commitments and related reserves." Nvidia releases their first quarter earnings reports on May 28 and investors will be eager to see what impact this has on their earnings.
On Wednesday, the Economic Club of Chicago hosted a discussion with Federal Reserve Chair Jerome Powell, where he warned that President Trump’s trade war could limit the Fed’s ability to cushion the economy. Powell expects tariffs will raise prices and unemployment, placing the Fed in a tough spot: raising interest rates could fight inflation but worsen job losses, while cutting rates might boost jobs but fuel inflation. He emphasized that while the Fed balances both inflation and employment, stable prices are essential for long-term job growth. The central bank is wary of temporary price spikes from tariffs turning into sustained inflation due to disrupted supply chains—especially in sectors such as car manufacturing. Given these risks, Powell signaled that the Fed will likely wait for clearer signs before changing interest rates, and might prioritize controlling inflation over boosting jobs if forced to choose. These remarks were clearly not what investors wanted to hear, causing a broad-based market decline on Wednesday.
Takeaways for the Week
The impact of tariff policy will persist as developments regarding rates and exemptions continue.
March retail sales increased 1.4% on a monthly basis, a bigger gain than the forecasted 1.3% rise that was projected by economists. Consumers appear to be front loading large purchases, namely automobiles, to get ahead of the tariff induced price hikes.