Circuit Breaker ahead? 07/04/2025

HOT stories for today
 

US market wrap:
 

• U.S. stock markets faced significant volatility following President Donald Trump's announcement of sweeping new tariffs, including a universal 10% tariff and higher reciprocal levies on major trading partners such as the European Union, China, and Japan.
• The S&P 500 plummeted 4.8%, marking its worst performance since June 2020, while the Dow Jones Industrial Average and Nasdaq Composite also saw sharp declines. Small-cap stocks, represented by the Russell 2000, officially entered bear market territory, down over 20% from recent highs. 

Circuit Breaker ahead?
 

• Amid market turmoil and the fact that futures are down more than 4% at the moment, there is growing concern about the activation of market circuit breakers—mechanisms designed to halt trading during significant market declines to prevent panic selling.
• These circuit breakers are triggered when the S&P 500 drops by specific thresholds: a 7% decline halts trading for 15 minutes; a 13% drop results in another 15-minute pause; and a 20% plunge stops trading for the remainder of the day. As of April 4, the S&P 500 reached a low of 5,101.75, approaching the first threshold of 5,018.76 but not yet triggering a halt. The last activation of these circuit breakers occurred in March 2020 during the onset of the COVID-19 pandemic.  

Stocks on the move: 
      

• Tesla [TSLA], Palantir Technologies [PLTR] — Retail investor favorites couldn't escape Friday’s broad market downturn. Electric vehicle giant Tesla sank 10.4%, while Palantir, a defense and data analytics firm, plunged 11.5%.
• Chipmakers — Semiconductor companies with significant ties to China faced sharp losses. Marvell Technology [MRVL] retreated 11.2%, Intel [INTC] slumped 11.5%, while Nvidia [NVDA] and Broadcom [AVGO] declined 7.4% and 5%, respectively, amid growing geopolitical trade concerns.
• Boeing [BA], GE Aerospace [GE] — Aerospace names were hit hard, with Boeing falling 9.5% and GE Aerospace tumbling 16.5%, as newly announced tariffs from the Trump administration raised concerns about higher production costs for aircraft and engines.
• Casino Stocks — Macau-exposed gaming operators fell under pressure. Las Vegas Sands [LVS] dropped 8.4%, while Wynn Resorts [WYNN] and MGM Resorts International [MGM] each shed over 3.5% as investors worried about slowing tourism and discretionary spending.

Today’s action

• Asian markets mirrored Wall Street's downturn, with Japan's Nikkei 225 dropping nearly 8%, Hong Kong's Hang Seng plummeting 10.7%, and China's Shanghai Composite falling 6.3%. Major companies like Alibaba and Tencent experienced significant declines. The broader concern centers on escalating economic uncertainty, particularly for export-heavy Asian economies.
• U.S. stock futures slid again Monday, signaling more pain ahead after last week’s tariff-fueled rout. Dow futures dropped 1,033 points (-2.68%), S&P 500 futures fell 3.34%, and Nasdaq-100 futures sank 4.26%. President Trump shrugged off the sell-off, saying, “Sometimes you have to take medicine to fix something.” Traders now eye this week’s inflation data and FOMC minutes for the next market catalyst.

Watchlist: TSLA, BA, NVDA, JPM, PLTR, WYNN, META, MSFT, JNJ

Bitcoin

• Bitcoin [BTC] took a sharp dive, plunging to an intraday low of $77,275 amid the market turmoil. Despite a mild recovery, the world's largest cryptocurrency still posted a significant loss over the past 24 hours. The broader cryptocurrency market wasn't spared, with Ether [ETH] and Solana [SOL] also experiencing declines, underscoring the heightened volatility and risk appetite surrounding altcoins.
• Bitcoin's sharp drop triggered a cascade of long liquidations, prompting bullish traders to exit their positions to cover mounting losses. Over the past 24 hours, more than $247 million in Bitcoin long positions were liquidated, according to CoinGlass. Ether [ETH] wasn’t spared either, with $217 million in long positions liquidated amid the sell-off. The move underscores the vulnerability of crypto markets to macroeconomic-driven shocks and volatility spikes.
  Watchlist: Bitcoin: 76 000-100 000,  Ethereum:1500-2600, Solana: 80-150

Forex

• The Japanese Yen [JPY] continues to gain ground, rising as traders flock to safe havens amid rising fears that President Donald Trump's tariffs could spark a global economic slowdown. The USD/JPY pair hovers near multi-month lows, driven by risk aversion and growing expectations of a Bank of Japan rate hike later this year.
• At the same time, the Euro [EUR/USD] surged, breaking above 1.1000 as the U.S. Dollar sold off sharply. The Greenback remains under pressure following the Trump administration's aggressive trade stance, with attention now turning to key U.S. economic indicators for the next move.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-150

Basic Materials

• Gold [XAU/USD] pulled back, slipping below the $3,100 mark after failing to build on a late rebound. While the precious metal saw renewed selling, downside appears limited amid a shaky macro backdrop. Trump's tariff-driven risk-off sentiment continues to support safe-haven demand, while Federal Reserve rate cut bets are keeping the U.S. dollar in check, helping to cushion gold's losses near record highs.
• Meanwhile, crude oil prices plunged over 5%, with WTI trading around $60.31 per barrel. Sentiment soured as Trump's trade policy raised demand concerns, and OPEC+ added further pressure by announcing a surprise output hike starting in May.
  Watchlist: GOLD 2600-3100, US Oil: 59.00-79.00

Key Economic Events Today:

EST time

03:00 am: USD Consumer Credit

Earnings

BMO (Before the US Market opens)
Nothing
AMC (After the US Market closes): LEVI, GBX, PLAY

The TEFS Analyst team wishes you a successful day!