Good morning investors. Jim Cramer warned that today could resemble the Black Monday of the 1987 crash. Waves of overnight selling ahead of this morning suggests another day in the red. Was this email forwarded to you? Join 190,000 self-directed investors and sign up here. 

Markets hate a guessing game

It took two trading sessions for the US stock market to lose over $6 trillion in value.

From Thursday morning to Friday afternoon, the S&P 500 dropped 10.5% in a decline that’s only matched by sell-offs from 2020, 2008 and 1987.

Tech stocks were ground zero, with the Nasdaq entering bear market territory as investors pivoted out of the Magnificent Seven. On Friday alone:

Meanwhile, volatility as measured by the VIX — Wall Street’s fear gauge — closed Friday at its highest level since April 2020.

But none of this should be taken as a loss of faith in Big Tech or a reassessment of fundamentals. Wall Street is simply bowing out of the guessing game with Washington.

For investors, President Trump’s “Liberation Day” confirmed that the outlook is more uncertain than ever — and no one wants to be the one predicting what comes next.

“It is remarkable that, even with two Wall Street insiders [Secretaries Howard Lutnick and Scott Bessent] in the cabinet, markets were caught so off guard by [Wednesday’s] announcement,” said DataTrek Research cofounders Nicholas Colas and Jessica Rabe.

JPMorgan estimates that Trump’s initial tariff proposal marks the most significant tax increase in over five decades.

To Apollo chief economist Torsten Slok, he sees downside risks to the economy “intensifying” across measures ranging from consumer and corporate confidence to earnings, US tourism and IPOs.

“President Trump’s reciprocal tariff plan was well-telegraphed ahead of the April 2nd announcement,” Slok wrote in a note, “but the market was caught off guard by their breadth, timing and magnitude.”

China responded Friday with a 34% tariff on all US imports beginning April 10. Yet more than 50 countries have reached out to the White House to begin negotiations on tariffs, according to Kevin Hassett, director of the National Economic Council.

Still, when trade policy becomes a moving target, the discount rate on risk rises fast.

Companies with global operations are suddenly facing a new set of rules. Apple, for one, earns more than half its revenue outside the US, while businesses like Nvidia and Amazon depend on complex international supply chains which tariffs will likely disrupt.

That’s why more than $60 billion has flowed into money market funds to start April, according to figures from Crane Data cited by The Wall Street Journal.

By this measure, cash on the sidelines hovers at a record $7.4 trillion.

What’s more, the latest AAII asset allocation survey showed retail investors are holding 18.3% of their portfolios in cash, the highest since 2020.

Fed Chair Jerome Powell on Friday acknowledged the uncertainty. He called the tariffs “larger than expected,” though he implied that the central bank — like investors — will remain in wait-and-see mode for now.

How surprising is it, really, that markets are stepping aside when the future is this foggy?

This isn’t a conventional stock crash. It’s a trade policy surprise. And until there’s more clarity from Washington, Wall Street will continue to opt out, one parked dollar at a time.

Market snapshot

Elsewhere:

 Chinese and Hong Kong stocks tumbled deep into red. Asia-Pacific markets extended their sell-off Monday, with major indexes across Southeast Asia tumbled at the open. Benchmark indexes in Korea, Japan, and Australia all moved lower. (CNBC)

 Treasury Secretary Bessent rejects recession fears. In an interview with NBC Sunday, he shrugged off concerns of a downturn, echoing Trump’s message for investors to “hang tough.” Bessent called it an “adjustment process” and said the administration will “hold the course” on tariffs. (Barron’s)

 The US dollar is dragging lower. Tariffs were expected to boost the greenback’s strength against rival currencies, but now recession fears have moved it in the opposite direction. The US Dollar Index dropped roughly 3% shortly after the “Liberation Day” announcement. (CNBC)

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About me:

I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at phil@openingbellmedia.com.