MW Here's what it may take for this beaten-down stock market to solidly rebound

By Barbara Kollmeyer

Monday's lows a 'critical line in the sand,' says portfolio manager

The clock striking midnight on Trump's tariffs set off some wild trading action early Wednesday. Stock futures have been all over the map, since an early slump, though catching more attention was a dramatic spike in 10-year Treasury yields in the early hours:

An auction of 10-year paper later will offer more clues about appetite for U.S. Treasurys, as some have begun to consider a possible emergency rate cut from the Fed.

Read: What the Fed could do as stock-market rout spreads to bonds, bank lending

As for stocks, some, like our call of the day from Revere Asset Management portfolio manager Connor Bates, say stocks are poised for a bounce. He says a "short-covering rally in the coming sessions" is likely.

"Traders are scared to hold positions overnight, and frustration with the market is widespread. Most people, especially those who've been burned recently, have little to no interest in getting involved right now," Bates said in a string of posts on X.

"I've never seen all my secondary breadth indicators this oversold - ever," he writes, in reference to technical tools that help traders confirm market trends. Breadth refers to the number of stocks advancing versus declining.

One of his charts indicates 2022 lows have been reached across several moving averages for S&P 500 constituents.

The portfolio manager also flags extreme fear in the market, and the CBOE's total put/call ratio, which is hovering at 1.22 and high enough to indicate an overly bearish market that could bounce.

"It's still a highly volatile market, but at this point, I believe the pain trade is to the upside," as he forecast "a multiday snapback rally," Bates said.

"Monday's lows are a critical line in the sand - if these levels are convincingly broken, the probabilities for a bounce decrease significantly. However, keep an eye out for an undercut and reclaim scenario," he said, referring to, for example, the S&P 500 dropping below a key support level, then quickly bouncing back above it.

The S&P 500 SPX hit a low of 4,835 on Monday.

He's not alone with the rebound call. Raoul Pal, co-founder and CEO of Real Vision financial media company, posted on X that the current market "feels a lot like Dec. 2018." Stocks had endured weeks of selling and a brutal Christmas Eve, but in January 2019, Fed Chair Jerome Powell signaled a dovish pivot and equities rallied.

"I think we get the same, plus a trade resolution with China. Risk in stocks feels like 10% downside max vs 15% upside in 2 weeks, and 25% upside in a month or two, and much more in 6 months," he wrote.

The markets

U.S. stock futures (ES00) (NQ00) are lower in what's been a volatile morning. The 10-year Treasury yield BX:TMUBMUSD10Y surged to as high as 4.516%, but is hovering at 4.372%. Oil (CL.1) (BRN00) is down over 4%.

   Key asset performance                                                Last       5d       1m       YTD      1y 
   S&P 500                                                              4982.77    -11.54%  -10.58%  -15.28%  -4.36% 
   Nasdaq Composite                                                     15,267.91  -12.50%  -12.44%  -20.94%  -6.37% 
   10-year Treasury                                                     4.414      28.70    9.90     -16.20   -13.70 
   Gold                                                                 3034.5     -3.62%   3.82%    14.97%   27.93% 
   Oil                                                                  57.06      -19.79%  -14.35%  -20.61%  -33.14% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

China has called for a dialogue with the U.S. as tariffs of 104% kicked in for that country at midnight.

Read: Here are the top 15 targets of Trump's trade blitz - and what Americans will pay

Trump indicated he intends to roll out more product-specific tariffs down the road and called out pharmaceutical drugs in particular. Shares of European pharma companies including AstraZeneca $(AZN)$ declined.

Delta Air Lines $(DAL)$ said it won't provide guidance beyond June, as it forecast current-quarter profits of between $1.5 billion and $2 billion on basically steady revenue.

Wholesale inventories are due at 10 a.m., Richmond Fed President Tom Barkin will speak at 11 a.m. and the minutes of the Federal Reserve's March meeting are coming at 2 p.m.

The U.S. is auctioning $39 billion of 10-year notes.

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The chart

It's not the most colorful of charts, but China's white paper on issues concerning China and U.S. economic and trade relations makes the case that each side benefits by roughly the same. "When the three factors of trade in goods, trade in services, and the local sales of domestic enterprises' branches in the other country are taken into full account, it can be seen that the economic and trade benefits gained by China and the U.S. are roughly balanced," the paper states. The publication of the white paper was greeted warmly by investors, less for the analysis and more for the signal that the country is willing to enter dialogue with the U.S. on trade.

Top tickers

These were the most-active tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   PLTR    Palantir Technologies 
   AMZN    Amazon.com 
   NIO     NIO 
   AMD     Advanced Micro Devices 
   BABA    Alibaba Group Holding 

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-Barbara Kollmeyer

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April 09, 2025 06:46 ET (10:46 GMT)

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