Yahoo Finance

Well, stocks sinking in today's trade as Trump adds onto investor worries, and Yahoo Finances Josh Shafer joins us now to discuss. Josh.

Hey Josh. Yeah, so, President Trump coming out today posting again on Truth Social, reiterating that he is not happy with Federal Reserve chair Jerome Powell. Uh going back to last week, Trump had sort of teased out that he would potentially look into firing Powell. He said he's excited for when Powell gets out of office. So that felt like kind of the key market driver this morning is this tension between President Trump and Fed chair Jerome Powell, and you take a look Josh, at just where stocks opened. Of course, we ended up closing even lower than where we opened the day, but I thought it was interesting point from Citi Stuart Kaiser, who's a trader, just sort of looks at the market action every day, and he said in a market like this, you're going to open like this and get direction down. The market just comes down, right? That's sort of what the action has been recently. If you're not positive off the open, you're not going to get incremental news throughout the day on maybe tariff negotiations or something like that. This market is just flowing down right now in a trading range, and that's sort of how the S&P 500 has been acting. I mean, we take a look at the 11 sectors, you didn't have a single sector in the red today, or, sorry, in the green. Everything, it was just full sort of risk off. And so it seems like this additional potential risk of maybe Trump will fire Powell, maybe he'll just keep coming at Powell. It's just one other thing that you're adding into an already chaotic market, and I don't know if that's necessarily the biggest headwind that stocks are facing, but it's another headwind, right?

To your point, Trump not happy with Powell. That was a very diplomatic way to put it, Josh. I mean, he was like, he's late, he's a loser, right? Um and I guess to your point, that was really, it's just more questions and more uncertainty against a backdrop where you already had plenty of questions and uncertainty.

Right. And I think just getting back to sort of what that question ultimately raises, right? Is well, markets like stability in the rates market, right? So if I can get to the 10-year T-note here. I mean, the concern would just be that we don't know where something like the 10 years is headed, right? It's not like the Fed again, is necessarily driving the 10-year action, but certainly how investors feel about where the Fed will go is an implication for how the 10 year moves, right? So that's sort of the concern is, all right, Powell's out. Who's in? Assuming Trump would bring in someone that would bring rates lower, right? Because that seems to be his goal.

Who's saying that's dovish?

Right. Who's actually coming in? That's dovish. How dovish are they? And it probably just creates chaos in the bond market, and one thing we know that's been true over the last several years, there's chaos in the bond market, that usually means chaos in the equity market, too. So I think that's sort of the main concern there.

All right, Shafer. Bullet number two.

Bullet point number two. This is one thing we're watching heading into tomorrow. So Tesla's report tomorrow, right? Tesla is going to report earnings after the bell. I was writing a story, like just how big tech earnings could give a good example of where we are in this sell off, right? So if you take a look here, these are how far the MAG 7 are from their fifth, most recent 52-week high. So look at Tesla. Tesla's down 50%, over 50% from its most recent 52-week high. Most of these other stocks all above 20%, couple of them above 30%. And so what strategists say when you see these big sell-offs is, okay, part of the reason stocks are selling off is because people think tariffs are going to weigh on profits. So the earnings estimates are eventually going to come down. Markets pricing that in before it actually happens. The question is, is this enough pricing? Right? Did we come down far enough where even a weak report is something that stocks can bounce off of? Drew's Keith Lerner had told us back going back about a week ago, that would be a key sign to him that maybe we'd bottom.

If meeting Lerner was saying, okay, the company comes out, and they cut the forecast, but the stock, you know, actually pops off that, that would, to Lerner would be like, okay, we, that, that's a, that's a bottom.

Yeah. That's a bottom. We've finally heard enough. We've prepared for the bad news, essentially, right? Now, if a company comes out, their stock's already down 40% this year, 50% from an all-time high, they say a bunch of bad news and the stock goes down more. Not a good sign, Josh, for where we're sort of at, right? And again, just to stick on Tesla, because it is coming out tomorrow. I mean, we already know first quarter deliveries were bad. Earnings estimates have been coming down all year. Investors are super sour on the story, so it doesn't seem like there's a lot more bad news to come there, right? It feels like it's kind of priced. So if people were to be surprised to the downside again, it would be a concerning sign.

Tesla's also just so much, too, because I totally agree with your take, and then there's this whole added wrinkle about just Musk, how much, how much does Musk talk about his role in the Trump administration and a timeline there and maybe when he would think about hanging up his spurs?

And it's kind of just been the perfect stock for risk-on sentiment in the market, right? When Tesla's ripping, the market's usually ripping, right? And when it's falling a lot, the market's usually falling a lot, right? So it's just an interesting indicator to sort of watch on.

We'll get more tomorrow. Thank you, Josh.

Yep.