December S&P 500 E-Mini futures (ESZ25) are trending up +0.03% this morning as investors weigh U.S. President Donald Trump’s latest tariff salvo and await the release of the Federal Reserve’s first-line inflation gauge for clues on the central bank’s next policy move.
After a stretch of calm on the tariff front, U.S. President Donald Trump announced a fresh round of sectoral tariffs set to take effect on October 1st. President Trump said pharmaceutical companies would face a 100% tariff on branded or patented drugs. “Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump posted on Truth Social. Also, imported heavy trucks will face a 25% tariff, kitchen cabinets and bathroom vanities will be hit with a 50% duty, and upholstered furniture imports will be taxed at 30%.
In yesterday’s trading session, Wall Street’s major indices closed lower. CarMax (KMX) tumbled over -20% and was the top percentage loser on the S&P 500 after the used-car seller posted downbeat Q2 results. Also, chip stocks lost ground, with Arm Holdings (ARM) and ON Semiconductor (ON) falling more than -2%. In addition, Oracle (ORCL) slumped over -5% after Rothschild & Co. Redburn initiated coverage of the stock with a Sell rating and $175 price target. On the bullish side, Intel (INTC) surged over +8% and was the top percentage gainer on the S&P 500 and Nasdaq 100 following reports that Apple and TSMC were among the companies the chipmaker had approached about investments or manufacturing partnerships.
The U.S. Bureau of Economic Analysis said on Thursday that Q2 GDP growth was revised higher to +3.8% (q/q annualized) in its third estimate, stronger than expectations of no change at +3.3%. Also, U.S. durable goods orders unexpectedly rose +2.9% m/m in August, stronger than expectations of -0.3% m/m, while core durable goods orders, which exclude transportation, unexpectedly rose +0.4% m/m, stronger than expectations of -0.1% m/m. In addition, U.S. existing home sales fell -0.2% m/m to 4.00 million in August, stronger than expectations of 3.96 million. Finally, the number of Americans filing for initial jobless claims in the past week fell by -14K to a 2-month low of 218K, compared with the 233K expected.
“We agree that the economy is strong and growing, but a lot of that good news is already priced in. Where we have our largest concern is with valuations,” said Chris Zaccarelli at Northlight Asset Management.
Fed Governor Stephen Miran said on Thursday that the central bank risks harming the economy if it does not act quickly to cut interest rates. Also, Fed Governor Michelle Bowman said that inflation is close enough to the central bank’s 2% target to justify additional rate cuts given the weakening labor market. At the same time, Chicago Fed President Austan Goolsbee voiced continued concerns about tariff-driven inflation and opposed any push for “front-loading” multiple interest rate cuts. In addition, Kansas City Fed President Jeff Schmid indicated that policymakers may not need to cut interest rates again in the near term.
Meanwhile, U.S. rate futures have priced in an 87.7% chance of a 25 basis point rate cut and a 12.3% chance of no rate change at the October FOMC meeting.
Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.2% m/m and +2.9% y/y in August, compared to the previous figures of +0.3% m/m and +2.9% y/y.
“If we were to see an uptick, that could worry investors that the Fed’s rate cut expectations are too ambitious, and that they may need to establish more of a wait-and-see approach on rates,” said Paul Stanley at Granite Bay Wealth Management.
U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists anticipate August Personal Spending to rise +0.5% m/m and Personal Income to grow +0.3% m/m, compared to the July figures of +0.5% m/m and +0.4% m/m, respectively.
The University of Michigan’s U.S. Consumer Sentiment Index will be released today as well. Economists expect the final September figure to be revised slightly higher to 55.5 from the preliminary reading of 55.4.
In addition, market participants will parse comments today from Richmond Fed President Tom Barkin, Fed Governor Michelle Bowman, and Atlanta Fed President Raphael Bostic.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.170%, down -0.10%.
The Euro Stoxx 50 Index is up +0.62% this morning as investors largely shrugged off U.S. President Donald Trump’s latest wave of tariffs and looked ahead to key U.S. inflation data. Insurance stocks led the gains on Friday, rebounding after three straight sessions of losses. Construction stocks also advanced. Healthcare stocks were largely steady following new U.S. duties on pharmaceutical products. The European Commission said on Friday it had secured a 15% ceiling on U.S. pharmaceutical tariffs. The benchmark index is on track to notch a small weekly gain. Meanwhile, the European Central Bank’s monthly survey released on Friday showed that Eurozone consumers raised some of their inflation expectations in August. Median expectations for inflation over the next 12 months rose in August to 2.8% from 2.6% in July, while five-year expectations climbed to 2.2% from 2.1%, their highest level since August 2022. In other news, German business daily Handelsblatt reported that the European Commission plans to impose tariffs of 25% to 50% on Chinese steel and related products. In corporate news, Daimler Truck Holding AG (DTG.D.DX) slid over -3% after the Trump administration announced new tariffs on truck imports.
Spain’s GDP data was released today.
The Spanish GDP rose +0.8% q/q and +3.1% y/y in the second quarter, stronger than expectations of +0.7% q/q and +2.8% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.65%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.87%.
China’s Shanghai Composite Index closed lower today as U.S. President Donald Trump’s announcement of a new round of tariffs weighed on sentiment. Pharmaceutical stocks fell on Friday after President Trump announced a 100% tariff on drugs from companies that aren’t building plants in the U.S. However, Citi Research analysts said the tariff impact on the country’s pharmaceutical and biotechnology firms should be limited, as China made up only about 4% of U.S. drug imports in 2024. Also, technology stocks retreated due to profit-taking as uncertainty lingered over the sustainability of the AI trade. At the same time, property stocks outperformed after state media reported that several emerging first-tier cities are considering new policy measures for the real estate market. The benchmark index posted modest gains for the week. Investors are now shifting their focus to a series of upcoming economic data releases, including industrial profits on Saturday and PMIs next Tuesday, for further signals on the health of the world’s second-largest economy. Investors are also awaiting policy signals from a Communist Party plenum in October, where top leaders will outline the nation’s social and economic development strategy for the next five years.
Japan’s Nikkei 225 Stock Index closed lower today as sentiment was dampened by U.S. President Donald Trump’s announcement of fresh tariffs and overnight losses on Wall Street. Pharmaceutical stocks led the declines on Friday after President Trump announced a 100% levy on branded or patented pharmaceutical products. At the same time, Japan’s trade negotiator Ryosei Akazawa said that the country secured the U.S.’s most-favoured nation status on its tariffs on chips and drugs. Jefferies analyst Stephen Barker said that while he considered it highly unlikely Trump’s announcement would result in “onerous” tariffs on Japan’s pharma industry, investors cannot simply ignore the risks. Chip stocks also slumped, mirroring the weak overnight performance among their U.S. peers. Limiting losses, real estate stocks climbed. Despite Friday’s drop, the benchmark index ended the holiday-shortened week higher. Meanwhile, government data released on Friday showed that core inflation in Tokyo unexpectedly held steady in September but remained well above the Bank of Japan’s 2% target, keeping the central bank on course for another interest rate hike. Separately, a labor ministry report showed that Japan revised real wages in July to a 0.2% decline from a previously reported 0.5% increase, meaning real wages have now contracted for seven straight months. In other news, foreign investors offloaded a net 1.75 trillion yen ($11.69 billion) worth of Japanese stocks in the week through September 20th, locking in gains from a record-setting rally and keeping the market on track for an 11th straight year of net outflows in September. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +7.84% to 25.99.
The Japanese September Tokyo Core CPI rose +2.5% y/y, weaker than expectations of +2.8% y/y.
Pre-Market U.S. Stock Movers
PACCAR (PCAR) climbed more than +6% in pre-market trading after President Trump announced new tariffs on imports of heavy trucks.
Intel (INTC) rose over +3% in pre-market trading after the Wall Street Journal reported that the Trump administration was considering a policy requiring U.S. firms to manufacture domestically as many chips as they import.
Wayfair (W) fell more than -3% in pre-market trading after President Trump announced a 50% tariff on imported kitchen cabinets and bathroom vanities, as well as a 30% tariff on upholstered furniture. Peer furniture and kitchen appliances retailers RH (RH) and Williams-Sonoma (WSM) are down more than -3%.
Concentrix (CNXC) plummeted over -21% in pre-market trading after the company posted weaker-than-expected FQ3 adjusted EPS and cut its full-year profit guidance.
IREN Limited (IREN) slumped over -7% in pre-market trading after JPMorgan downgraded the stock to Underweight from Neutral with a price target of $24.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - September 26th
KNOT Offshore Partners LP (KNOP), 36Kr Holdings (KRKR).
