Good morning! Today’s edition covers the wild and sharp swings that tariffs have inspired in the stock market, and whether Trump or the Fed could backstop investors. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

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Forget saved by the bell. Investors are hoping to be saved by a tweet. 

Markets have had a hard time determining how to price tariffs in the opening weeks of President Trump’s second term. The commander-in-chief’s social media posts are as likely to move asset prices as cold economic data, and his media-savvy cabinet members make plenty of news themselves.  

US tariffs against Canada, Mexico, and China took effect Tuesday, and traders scrambled to position for a trade war.

All three US benchmark indexes closed the day in the red, but then, like a scene in a play, Commerce Secretary Howard Lutnick appeared on Fox Business and said a deal was imminent. 

“Both the Mexicans and the Canadians are on the phone with me all day today, trying to show that they’ll do better,” Lutnick said, his words pushing stock futures higher after hours. 

As of Tuesday, the S&P 500 has wiped out all its post-election gains, and it hovers in negative territory for 2025.

“The initial animal spirits of Trump 2.0 have been trumped by the uncertainty unleashed by Trump Turmoil 2.0,” wrote strategists at Yardeni Research in a note early Wednesday.

“The whirlwind of tariffs imposed on America’s major trading partners, federal job cuts implemented by the DOGE Boys, and the upending of the world order have been head spinning.”

Who rescues the stock market? 

Under Biden, markets relied on the “Fed put” — the belief that the central bank would cut rates in the event of a stock market correction. Now, speculation is shifting toward a “Trump put” as traders wonder if the president will intervene to stabilize stocks. 

Considering the president treats the S&P 500 like a scoreboard, those expectations will likely gain momentum if stocks keep dropping. He does have a history of responding to sell-offs, after all.

While Trump hasn’t given much indication he’ll provide a backstop, he could do so with a single tweet. 

But if the White House doesn’t budge on tariffs, markets may cozy back up to Jerome Powell. Over recent weeks, traders have raised their bets to three rate cuts from two for 2025, largely on the assumption that the central bank will prioritize economic growth over inflation. 

The longer tariffs remain in play, the more pressure — justified or not — Powell will feel to alleviate recession fears.

To be clear, it was only a couple weeks ago the S&P 500 hit a record high. But traders have short memories. The last two trading days were jarring enough to leave them looking for reassurance. 

That places markets in an unusual guessing game: 

1. If Trump removes tariffs first, stocks could bounce back on optimism for trade deals

2. If Powell cuts rates first, investors could cheer lowering borrowing costs

3. If neither moves quickly, stocks will need to find other reasons to climb  

Now, there is a case for the White House and the Fed to both hold back from rescuing the stock market. 

Doing so, you might argue, elevates the short-term over the long-term. Trump himself has acknowledged that his policies could cause near-term economic uncertainty. 

That would leave the bull market in its most precarious position yet — stuck between an administration willing to tolerate pain and a Fed juggling conflicting priorities.  

Market snapshot:

Elsewhere:

🏦 Trump addressed Congress last night. He spoke of America’s comeback, rising small-business optimism, and economic prosperity. Democrat lawmakers disrupted his speech while Republicans chanted “USA”. Read the full recap from CNBC here.

📊 Some investors are worried about stagflation. President Trump’s tariffs raise concerns about the combination of weaker or stagnant growth combined with higher prices. It’s unclear how long the levies will remain in place, though some economists are becoming less confident in the US’ odds of avoiding a recession. (WSJ)

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Rapid-fire:

• China set its GDP growth target for 2025 at “around 5%” (CNBC)

• Goldman Sachs will target VPs in its next round of annual layoffs (WSJ)

• Gold prices are ticking higher as investors pile into the safe-haven asset (Barron’s)

• The US has entered the age of economic chaos as the Trump administration moves fasts and breaks things (Pomp Letter)

• CrowdStrike dropped 9% after a disappointing earnings forecast (CNBC)

• BlackRock led a deal to buy majority stakes in ports on either side of the Panama Canal, putting US firms in control of a key Trump target (WSJ)

• Coinbase, Chainlink, and MicroStrategy are among the names expected at Trump’s Crypto Summit on Friday (CoinDesk)

• Want more markets? WOLF Financial provides more timely trading insights (Link)

Interview:

I sat down with the New York Stock Exchange to discuss the AI boom, Trump’s impact on the stock market, and what it’s been like the first 12 months of building Opening Bell Daily:

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Write me at [email protected], reply directly to this email, or ping me on X @philrosenn.