US stocks edged lower on Tuesday as a slump in tariff-related volatility allowed investors to refocus on earnings season. The S&P 500 dipped slightly after back-to-back gains, while the Dow and Nasdaq also posted modest declines. Financial stocks outperformed, led by strong quarterly results from major banks, while Boeing weighed on the broader market amid geopolitical headwinds. Market sentiment was steadier overall, with the VIX falling to half of last week’s peak. Investors are now parsing earnings reports and watching for signals on tariff policy and macroeconomic momentum.

Key Takeaways:

  • Dow Slips as Momentum Cools After Recent Rally: The Dow Jones Industrial Average lost 155.83 points, or 0.38%, to close at 40,368.96. The index paused after two days of gains as investors digested corporate earnings and tariff policy signals. 
  • S&P 500 Pulls Back After Two-Day Advance: The S&P 500 slipped 0.17% to end at 5,396.63 on Tuesday, trimming recent gains. Investors turned their attention to earnings season and signs of easing volatility, with the VIX retreating to around 30. 
  • Nasdaq Edges Lower as Tech Momentum Slows: The Nasdaq Composite dipped 0.05% to 16,823.17, posting a third straight day of narrow-range movement. Tech stocks were mixed, with some names showing weakness following recent outperformance. 
  • Europe Rallies on Tariff Optimism and Strong Macro Reads: European equities advanced for a second straight day, with the Stoxx 600 up 1.6% amid growing hopes of a partial rollback in US tariffs. Germany’s DAX rose 1.43%, France’s CAC 40 added 0.90%, and the FTSE 100 climbed 1.41%, while Italy’s FTSE MIB jumped 2.39%. Banks and real estate stocks led gains with sector moves above 2.4%, fuelled by risk-on sentiment. On the macro front, German wholesale prices rose 1.3% annually but dipped 0.2% month-over-month, signalling softening pipeline inflation. France’s CPI remained flat in March, while harmonised inflation came in at 0.9% year-over-year. In the UK, the employment rate rose to 75.1%, even as payrolled employment declined. Wage growth remained firm, with regular earnings up 5.9%—highlighting lingering inflation risks for the Bank of England.
  • Asia Mixed as Investors Await Key China GDP Data: Asia-Pacific markets posted mostly positive closes Tuesday, helped by Monday’s US rally and reduced trade anxiety. Japan’s Nikkei 225 climbed 0.84%, while the broader Topix rose 1%. South Korea’s Kospi added 0.88% amid news of a 33 trillion won support package for its semiconductor sector. India’s Nifty 50 surged 2.27% on improved wholesale inflation data, now at a five-month low of 2.05%. Australia’s ASX 200 inched up 0.17%. Singapore’s 30-stock benchmark rose 1.83%. However, Chinese indices were flat, with both the Hang Seng and CSI 300 subdued as investors awaited first-quarter GDP data. Analysts expect fiscal policy to lead the next stimulus wave, with infrastructure and housing in focus.
  • Oil Prices Dip as Demand Forecasts Cut Again: Brent crude fell 21 cents to $64.67, while WTI slipped 20 cents to $61.33. The IEA followed OPEC in slashing global demand growth forecasts, citing deteriorating economic outlook and trade uncertainty. UBS cut its Brent price outlook by $12 to $68 a barrel, while BNP Paribas lowered its expectations to $58. Despite tariff exemption headlines offering some relief, the broader backdrop remains bearish for crude in the near term.
  • Treasury Yields Mixed as Market Volatility Settles: The 10-year Treasury yield fell 3 basis points to 4.335%, while the 2-year ticked up 1 basis point to 3.841%. Bond markets calmed following a turbulent week that saw the 10-year surge over 50 basis points. The recent tariff pause provided relief, but structural concerns persist. China, the second-largest foreign holder of US debt, may be reducing exposure, and hedge funds remain net sellers amid valuation and liquidity worries.
  • Empire State Manufacturing Beats Forecasts but Still Contracting: The New York Fed’s Empire State index rose nearly 12 points to -8.1 in April, beating the -12.4 consensus forecast. While the reading improved, it remains in negative territory, indicating contraction. Forward-looking indicators deteriorated, with expectations for general business conditions falling sharply. 

FX Today:

  • EUR/USD Retreats from Multi-Month Highs but Trend Intact: EUR/USD fell 0.58% to close at 1.1284 after reaching a high of 1.1379 earlier in the session. The pair has now posted two consecutive declines, with Tuesday’s session forming a long upper wick, hinting at short-term exhaustion. However, the broader uptrend remains intact, supported by rising moving averages, the 50-day at 1.0728, the 100-day at 1.0573, and the 200-day at 1.0748. A daily close above 1.1400 could trigger another bullish extension toward the 1.1500 level. Immediate support is found at 1.1200, followed by 1.1000 and the 50-day SMA. 
  • GBP/USD Climbs to Highest Level Since July 2023: GBP/USD gained 0.28% to close at 1.3227, marking its sixth straight daily gain and the strongest close since late July 2023. The pair posted an intraday high of 1.3252 and remains firmly above all major moving averages, including a golden cross with the 50-day SMA now above the 200-day. Bullish momentum is strong, with the next target seen near 1.3300. Immediate resistance is the 1.3250 handle, while first support sits near 1.3050. Continued wage growth in the UK supports the currency’s strength, with inflation risks reinforcing a hawkish outlook for the Bank of England. 
  • USD/JPY Holds Support but Bearish Bias Dominates: USD/JPY inched up 0.12% to 143.18 after recovering from an intraday low of 142.59. Despite the gain, the pair remains trapped below major resistance levels and well under key moving averages: the 50-day at 149.20, the 100-day at 152.02, and the 200-day at 150.77. The structure reflects a firmly bearish trend, with a pattern of lower highs and lower lows. Resistance now lies at 144.00–144.50, while support is at 142.00 and then 140.00. A break below 142.00 could accelerate losses toward multi-month lows. Unless the pair reclaims levels above 145.00, downside pressure is expected to persist.
  • USD/CHF Extends Bounce but Faces Major Resistance Ahead: USD/CHF rose 1.14% to close at 0.8229, marking its second day of gains following a sharp selloff to multi-month lows near 0.8100. While the recovery offers short-term relief for bulls, the pair remains firmly below its major moving averages: the 50-day at 0.8821, the 100-day at 0.8906, and the 200-day at 0.8780. These levels now act as resistance, with the first key barrier near 0.8400. Unless reclaimed, rallies are likely to be corrective. On the downside, support rests at 0.8150 and 0.8100. A move below 0.8100 could open the path to 0.8000. 
  • USD/CAD Rebounds From 200-Day SMA After Deep Pullback: USD/CAD gained 0.70% to finish at 1.3965 after bouncing off a low of 1.3849. The move follows a sharp retreat that saw the pair break below the 50-day and 100-day SMAs, triggering a test of the 200-day SMA at 1.3999. Tuesday’s close just below that level signals early stabilisation but not confirmation of a trend reversal. The next upside target lies near 1.4150–1.4200, while a failure to hold above 1.3900 could push the pair back toward 1.3800 and 1.3650. The 200-day remains a key battleground, and price action in the coming sessions will likely define short-term direction.
  • Gold Consolidates Near Record Highs in Tight Session: Gold rose 0.62% to settle at $3,230 after hitting an intraday peak of $3,232. The session formed a narrow-bodied candle, suggesting indecision following Friday’s breakout. Despite the muted action, gold remains near all-time highs and above key moving averages: the 50-day at $2,985, the 100-day at $2,831, and the 200-day at $2,697. The trend remains strongly bullish, though momentum is showing signs of fatigue. Resistance lies at $3,245–$3,250, while support begins near $3,175 and extends to the rising 50-day. A breakout above $3,250 would confirm trend continuation, but failure to do so could trigger a pullback.

Market Movers:

  • Hewlett Packard Enterprise Pops on Elliott Stake News: Shares surged 5.1% after Elliott Management disclosed a $1.5 billion stake in the company. The activist investor reportedly plans to engage HPE leadership on strategies to enhance shareholder value.
  • Boeing Drops After China Halts Aircraft Purchases: Boeing shares fell 2.4% after Bloomberg reported that Chinese airlines have been ordered to stop taking new aircraft deliveries and suspend purchases of US aviation equipment. 
  • Bank of America Rallies on Strong Q1 Earnings Beat: Bank of America jumped 3.6% after posting earnings of $0.90 per share on revenue of $27.51 billion, both beating analyst expectations. 
  • Albertsons Sinks on Disappointing Guidance: The grocery chain dropped 7.6% after issuing full-year earnings guidance that missed expectations. While Q4 earnings and revenue topped forecasts, projected EPS of $2.03–$2.16 came in below the $2.28 consensus.
  • Netflix Jumps on Long-Term Growth Target: Netflix rallied 4.8% after The Wall Street Journal reported executives laid out aggressive long-term goals, including doubling revenue and reaching a $1 trillion market cap by 2030.
  • Rocket Lab Soars on Hypersonic Deal Announcements: Rocket Lab shares surged 10.1% after the company announced new defence contracts with the US Air Force and UK Ministry of Defence to develop hypersonic test vehicles, expanding its aerospace footprint.

Markets took a breather Tuesday as easing tariff fears gave way to a more measured focus on earnings and macro data. While US stocks ended slightly lower, volatility retreated and financials outperformed, signalling some underlying resilience. European equities led global gains on hopes of policy relief, supported by stable inflation prints and upbeat sector momentum. Asia remained mostly firm ahead of China’s GDP report, which could influence the next leg in global risk appetite. With more earnings on deck and geopolitical risks still simmering, traders are likely to remain headline-sensitive through the rest of the week.