S&P 500 Faces Tariff Headwinds as Tech and Consumer Stocks Clash

The stock market is under pressure today as investors digest a mix of weak economic data, corporate earnings misses, and the lingering impact of trade policies. Let’s break down the Top 10 things to watch shaping this volatile Wednesday:

1. S&P 500 Struggles Amid Tariff Fears

The S&P 500 is on track for a sharp lower open, down nearly 1% for April despite a six-day winning streak. This reflects anxiety over President Trump’s “reciprocal” tariffs, which have clouded corporate profitability.
The index remains within striking distance of its April 2 closing level, but the path forward hinges on Friday’s jobs report and tech earnings.

2. GDP Contraction Sparks Recession Fears

The U.S. economy shrank by 0.3% in Q1 2025, defying expectations of growth. This marks the first GDP report under Trump’s second term and adds fuel to recession concerns. Analysts blame trade tensions and corporate caution for the contraction.

3. Weak Job Growth Ahead of Friday’s Report

Private payrolls grew by just 62,000 jobs in April—half of forecasts. Companies are holding back on hiring as tariffs raise costs and uncertainty. The official government jobs report (due Friday) will be critical for gauging labor market health.

4. Tech Stocks in the Spotlight

• Meta Platforms and Microsoft report earnings tonight, with AI spending a key focus. Meta’s digital ad performance could determine its stock’s direction, while Microsoft’s cloud revenue growth is under scrutiny.
• Apple faces headwinds: Barclays cut its price target, citing tariff pressures and slowing iPhone demand.

5. Starbucks’ Turnaround Plan in Doubt

Starbucks shares plunged 9% after earnings, with Goldman Sachs downgrading the stock to “hold.” CEO Brian Niccol must prove his turnaround strategy can reverse declining sales and customer loyalty.

6. Casual Dining Sector Suffers

Brinker International (Chili’s owner) saw its stock drop 14% after a weak earnings beat. Analysts warn the casual dining sector is struggling with rising costs and shifting consumer preferences.

7. Bristol Myers Squibb’s Drug Hopes

Analysts are betting on Cobenfy, Bristol Myers’ new schizophrenia drug. Piper Sandler raised its price target to $66, but success hinges on positive clinical trial results.

8. Caterpillar’s Tariff Woes

Caterpillar missed Q1 earnings, citing tariff costs. Despite a strong Q2 outlook, CEO Jim Umpleby’s departure after eight years of profit growth leaves leadership questions.

9. Honeywell’s Buybacks Offer a Silver Lining

Honeywell’s stock rose after analysts highlighted its $225 price target and manageable tariff impact. Increased buybacks are a positive sign, though broader economic risks linger.

10. Investors Grappling with Trade Policy Costs

Tariffs are costing companies like RTX Corporation up to $850 million in 2025 earnings. Cramer warns these policies disproportionately burden lower-income households, adding to economic fragility.

Conclusion: Navigating a Split Market

The market is caught between two forces: corporate resilience in tech and sector-specific pain in consumer and industrial stocks. While AI-driven companies like Microsoft and Meta could rally if earnings exceed expectations, sectors like casual dining and industrials face an uphill battle.

Key takeaways:
- Tech earnings tonight will set the tone for the week.
- The jobs report on Friday is critical—weak data could push the S&P 500 deeper into negative territory.
- Avoid overreacting to volatility; focus on companies with strong balance sheets and defensive qualities, like Honeywell.

Investors should also heed Cramer’s Investing Club trade alerts, which provide a 45-minute head start on his charitable trust’s moves. With markets this choppy, timing matters.

As always, remember: “Bull markets are born on pessimism, grow on skepticism, and die on optimism.” The data today suggests we’re in the “skepticism” phase—so tread carefully!