Pain on the Way

Liberation Day feels more like “Obliteration Day” with stocks spiraling lower in response to Trump’s tariffs. The Daily Breakdown digs in.

Thursday’s TLDR

What’s happening?

Stocks gained for a third straight day yesterday, but those gains are being wiped out in Thursday’s pre-market trading session. That’s after President Trump unveiled his sweeping tariff plan after yesterday’s close. 

The TLDR: Markets don’t like it. 

The tariffs will impact up to 185 countries simultaneously, and has investors selling first and asking questions later. This morning’s selloff has the S&P 500, Nasdaq 100 and Dow down about 3% to 4%. 

If these indices open near current levels, it will be pretty close to the recent lows. I will be curious to see how the indices react to these lows. Will they recover these marks and start to bounce? Or will these lows act as some form of resistance and the indices will fade lower? 

Either way, investors are bracing for impact, especially in global-facing companies. 

Consumer discretionary, tech, energy and industrials sport the largest pre-market losses, while healthcare, utilities and real estate are holding up the best right now.

Days like this are never easy. Take a deep breath and remember your investing goals and plans. Be careful with leverage and have a plan on what you want to do. 

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The setup — Bonds

We’re looking at the TLT ETF, the most traded long-term government bond ETF on the market. Shares are moving higher this morning as investors flee risk assets like stocks and rotate into risk-off assets like bonds. 

We’ll have to see how stocks react this morning and whether the recent lows hold. Either way, bonds have been doing okay this year, with the TLT up 4.7% in 2025.

A flight-to-safety trade is one catalyst for bonds, but the other is interest rates. Specifically, if the Fed continues to lower rates, bulls’ believe it will bring down bond yields (thus lifting bond prices because they have an inverse correlation).

So far though, the upside traction has struggled. After clearing downtrend resistance in February, the TLT has struggled with the $92 to $93 area and the 200-day moving average. This area is current resistance. 

For a sustained rally, bulls need to see TLT clear this zone. Otherwise, bearish momentum can persist in the intermediate term. 

Remember, bonds don’t have to be a trade, they can be a foundational piece of portfolio diversification. For those seeking shorter durations than the TLT, they could consider the IEF ETF (which are 7 to 10-year Treasuries), as well as the IEI ETF, (which are 3 to 7-year Treasuries). 

Options

This is one area where options can come into play, as the risk is tied to the premium paid when buying options or option spreads. 

Bulls can utilize calls or call spreads to speculate on a rebound, while bears can use puts or puts spread to speculate on more downside should support break. 

For those looking to learn more about options, consider visiting the eToro Academy.

What Wall Street is watching

NKE – Nike stock can’t catch a break. After a large decline from the highs, shares are down more than 10% in pre-market trading due to the latest round of tariffs. Walmart, Amazon, Lululemon Athletica, On Holdings, and other consumer-oriented companies are feeling the heat, too. 

AMZN – Amazon has submitted a last-minute bid to acquire TikTok, just days before a US deadline that could ban the app without a non-Chinese buyer. While some in the negotiations aren’t taking the bid seriously, the White House is expected to weigh final proposals — including Amazon’s — this week.

TSLA – Tesla stock has been volatile, falling more than 5% at yesterday’s open only to finish the day higher by more than 5%. Now it’s down more than 6% in pre-market trading. Yesterday’s Q1 delivery results badly missed analysts’ expectations, with deliveries of 336,681 falling 13% year over year and tallying the lowest figure since Q2 2022.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.

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