Subscribe to receive these charts every morning!

1. Consumer sentiment is cratering.

The preliminary Michigan sentiment survey was pretty ugly, with the overall sentiment index dropping from 57.0 in March to 50.8 in April.

Sentiment is now down 31% from its post-election peak, which is the most rapid four-month drop on record.

Falling stock prices is one reason households could be marking down their view of current conditions.

It’s a major deterioration in America’s soft data.

2. Q1 earnings season poses next big test for the S&P 500.

The latest consensus suggest that S&P 500 earnings will have grown 7.0% year-on-year for the quarter ending March, as per FactSet data.

However, the optimism of these figures is tempered by the cloud of tariffs and their potential impact on corporate outlooks.

Notably, companies with significant international exposure may face greater challenges, as tariffs can directly affect their supply chains and profit margins.

Beyond the reported earnings figures, investors are particularly interested in the forward guidance provided by companies for insights into how tariffs and economic uncertainties are impacting future outlooks. A dour forecast from a bellwether firm could amplify fears that the economy is losing steam.

Here are the bottom-up consensus earnings expectations per sector for Q1.

3. US earnings expectations are already being slashed for the remainder of 2025.

A Citi index shows analysts are slashing estimates at a pace that is generally seen during growth shocks, such as the pandemic.

“I believe that a recession has already started and the economy is going to deteriorate remarkably in the second quarter,” said Carl Weinberg, chief economist at High Frequency Economics.

The effect of the tariffs will be felt across the U.S. economy.

4. Sell the rally.

BofA’s Michael Hartnett said investors should sell any rallies in the S&P 500 Index until the Federal Reserve steps in and the US and China de-escalate the global trade war.

From a technical standpoint, the S&P 500 remains at a critical level below its 200-day moving average. After dropping below this key indicator in early March and hitting a low of 4,835 on April 7, the index staged a rally.

However, analysts caution this may only be a technical rebound from oversold conditions.

5. The biotech meltdown.

The U.S. biotech sector had already been through a brutal few years before the latest market crash. Over the past five years, the SPDR S&P Biotech ETF (XBI), which tracks small- and midcap biotech stocks, has lost 14%, while the S&P 500 has gained 89%.

Robert F. Kennedy Jr. shake-up of the nation’s health agencies and persistently high interest rates are prompting it to sink even faster than the broader market, despite so far avoiding the worst of the tariff fallout.

Despite that bleak backdrop, there are still some opportunities for patient investors. After all, the U.S. is still the top spender on drugs by far. And that isn’t something RFK Jr. or President Trump is likely to change.

Source: WSJ

Not a subscriber yet?