Yahoo Finance

Time now for today's strategy session. Stocks kicking off the second quarter in the red for investors hoping that the worst of the selling may be behind us, don't hold your breath. The same headwinds that led to the S&P's worst quarter in three years haven't gone away. Almost three years. Joining us now, we've got Yahoo! Finance markets reporter Josh, Josh Shafer. So, sorry about that, Josh. Um, the headwinds are are still here and that's why I know some of your sources say they're not going away. So, essentially,

what I was thinking about, Maddie, as I was writing the story was sort of harkening back to something that Julie actually talked to Rick Reader from BlackRock about last week. He said the the market sort of gets fixated on one thing at a time, right? And we can't focus on more than one thing, really, it seems like in these moments, and right now, it's tariffs, right? And so, you have the tariff deadline, so to speak, maybe, coming on Wednesday, and it kind of got me thinking, okay, so what if we actually did resolve the tariff number question? We get a tariff number, market can start work at pricing that in. What else has actually been going on? And there's just a lot of other things that have not been trending that well over the last month during the sell off, right? So, I'm thinking about the consumer vibes we've talked a lot about, sort of sentiment, right, consumer sentiment, investor sentiment, overall business sentiment has not been doing well. Yes, that's partially tariff driven, but there are other factors at play there too. You think about the weakening economic data that we've seen through the first quarter. You look at something like the City Economic Surprise Index which tracks how economic data comes in versus expectations. Basically been a straight line lower through the first quarter, right? We're starting to maybe catch back up to zero there, maybe we finally brought those expectations far enough down. But I think of things like that, you think of the earnings cuts we've started to see. Again, not all of this is tariff related, the consumer spending that you saw drop in January and February. And so, the question is, all right, we removed them, maybe at some point, the constant tariff headwind, constant tariff talk. How are things actually going? And I don't know if they're going that great anyway to give me some reason to feel like, all right, there's conviction once the tariff uncertainty is over that everyone should be buying.

Well, and we also have an event pretty immediately after the tariffs in the form of jobs day on Friday, and it it's been interesting to hear, um, you know, like we talked to Aditya Bhave from Bank of America yesterday, economist there, and he basically said, "It's all about the labor market." And he is not as worried because of what he perceives as the relative solidity of the labor market. But if that goes, all bets are off, essentially.

It feels like the last thing that people are sort of staking their claim in right now, right? In terms of economic data, you can hear a lot of economists talk about risks of recession are rising. A lot of things don't look great, but at least we have the labor market. At least layoffs are low right now. And we've sort of been on this thin line of, all right, we have to teeter one way at some point, and I do think you raise a good point, Julie, of what if the unemployment rate starts creeping up? And not necessarily that that in and of itself is ultimate panic moment, but you add in the slowing economic data narrative with perhaps maybe a slight slip in the unemployment rate. You have a hiring rate that's at basically a 10-year low, right? So, these people that would go back into the labor market, how are they going to find jobs? And so, you have a lot of dynamics at play that don't set up for a welcome environment for basically any downside to the labor market at this point, which feels, I don't know, not great necessarily.

Definitely not great. Well, and I remember Victoria Hernandez, I think, telling us that, uh, the tariff impact could have a nine-month lag time for when we start to see it impacting layoffs because of it hits profit margins in a certain quarter, maybe up to nine months later, we could see companies cutting costs through their labor versus any type of other way that they could kind of increase their revenue to protect those margins.

There's a lot of feed through there, right? And you're not going to really know the answer to that instantly. And then to sort of bring it back to the market and make a stock market point out of this as we end the first quarter. What's going to help big tech at this point? Like, I don't think there's clear catalyst that people are circling other than maybe we finally revised earnings down far enough, and like revisions are starting to bounce back. But I thought it was interesting last week Barclays' Binyu Krishna, he downgraded his S&P 500 target to 5,900. Said he still likes big tech medium to long term, but he said for more of a short-term trade in the next quarter or two couldn't find a catalyst that he really liked, right? And so, that doesn't make me feel great about the direction of the major indexes if your main leaders people don't see a lot of reasons for people to buy them other than they got a little bit cheaper. Yeah. All right, Josh. Thank you.

I'll be I'll be more positive next time. I promise.

Hey! No, you don't have to be. Don't prom Don't make promises you can't keep, buddy.

I feel embarrassed now. That was embarrassing.