Ripped from the brink: Tech flexes as tariff fear fades

US markets

Today, the “Great Wall Street 2025 Rebound” hit the afterburners, vaporizing those staggering intraday losses in a feral late-day buy-the-dip blitz and even extending the rally into after-hours, despite mounting whispers that Trump’s tariff barrage could fracture the U.S. growth engine. After a month defined by jaw-dropping gyrations, the S&P 500 yanked itself out of a 2% hole by the close—the steepest one-day V-shaped ripback since 2022. These brutal, sine-wave swings have become standard in an ultra-sparse top-of-book landscape, where every order-book tremor can trigger seismic price shock.

Market sentiment lit up on two potent catalysts: off-the-record back-channel chatter between Washington and Beijing, because nothing squashes tariff jitters like a clandestine olive branch, and the ever-present Fed put, with speculators pencilling in another round of policy steroids to inoculate risk assets against an impending downturn.

It’s wild to think this same index flirted with a bear market—nosediving nearly 20% from its February peak into April 8—only to thunder back and claw off roughly half the losses. And when you’re ready to bury the “U.S. exceptionalism” narrative, mega-cap tech reminds everyone why it remains the bellwether for resilience. Google blitzed the Street’s targets, Meta smashed estimates, hiked its capex outlook and sent its share price rocketing, and Microsoft tore higher on another blowout AI-cloud growth quarter—even as overall CapEx quietly slumps. Once again, America’s tech powerhouse is charging full speed ahead, leaving tariff headwinds in the dust.

Import Surge, Not Recession Risk

Wall Street’s heart skipped a beat Wednesday as the tape puked on a –0.3% GDP bomb—only to slam the bid and rip higher once desks twigged it was nothing more than a tariff‐front‐running mirage. This wasn’t a consumer rout or capex collapse—it was a full‐throttle import juggernaut that torpedoed net exports. Think gold bars and finished goods ravenously offloading into U.S. ports ahead of Liberation Day levies—pure calendar distortion, not a sign of structural weakness in consumption or investment.

Under the hood, U.S. household spending held firm, jumping 1.8%, while corporate capex came roaring back—equipment outlays surged 22.5%, driving overall business investment up 9.8%. Meanwhile, fiscal hawks went to work: federal spending was cut 5.1%, dragging total government outlays 1.4% lower.

But the headline-grabber was net trade. Imports rocketed 41.3% against a modest 1.8% bump in exports, shaving 4.8 ppt off headline GDP. That flood of inbound goods also swelled inventories, tacking on 2.3 ppt and priming the ground for the capex surge.

Bottom line: today’s print is a tactical timing distortion, not a structural warning flare.

Atlanta Fed’s Q2 GDPNow just rocketed to +2.4%—an eye-popping 2.7% swing from Q1 panic—driving home how these front-loaded distortions can flip the script on a dime. Remember that COMEX gold hoover-fest that sent the “M” in X–M haywire? Once desks peeled back the layers, net trade emerged as the villain, shorts got vaporized, and core consumption and capex proved rock-solid. With that knee-jerk unwind now exposed as noise, fading today’s squeeze was the high-probability tactical play.

Meanwhile, risk assets are on a tear, fueled by whispers of a trade-war détente, another mega-cap tech power surge and the ever-dependable Fed put. Ten-year Treasury yields slid to three-week lows as fixed-income desks finally repriced rate-cut odds, and the dollar’s modest uptick feels more like collateral to the equity rally than a fresh macro trigger. Behind the scenes, tariff risk is loosening its grip—D.C.’s surgical auto carve-outs and Beijing’s stealth exemptions on key U.S. imports aren’t a ceasefire, but they’re stripping away headline noise and restoring supply-chain clarity.

Traders are already front-running this normalization, stacking positions for a world where tariffs plateau at manageable levels and paving the runway for smoother Wall Street forecasts and steadier Main Street execution.

US equities hold the buck above water

U.S. equity outperformance is shouldering the dollar’s bid, thanks to Trump’s measured tariff détente, which is cushioning an otherwise underwhelming data backdrop. Traditionally, EUR/USD and USD/JPY are the rifles for fading the greenback, but both are screaming “positioning stretched.”

EUR/USD remains positioned atop a mountain of structural longs, and the spot skew indicates dealers are eagerly trimming at every uptick. On the yen front, JPY longs are as crowded as ever, with all eyes fixed on the BOJ’s next policy whisper.

AI arms race: Huang puts U.S.-China in sudden death overtime, but trade jobs are the hidden bull case

If you’re still brushing off AI as just another tech bubble rehash, Nvidia’s Jensen Huang just made it clear — this isn’t the metaverse, this is Manhattan Project 2.0. Speaking in D.C. yesterday, Huang lit the fuse: the U.S.-China AI race isn’t coming — it’s already neck and neck. And the punchline? It won’t be settled on Wall Street, but on factory floors and trade desks around the world.

“China is right behind us. We’re very, very close,” he warned. No timeline, no fourth quarter comeback — this is an “infinite race.”

Translation: this isn’t about one earnings cycle. It’s a global multi-decade retooling of the industrial base, with AI at the center of the flywheel.

And the implications? Massive capex, a resurgence in trade labor demand, and a whole new factory model — not just building widgets, but converting electricity into intelligence. Think data centers on creatine. Huang framed these “AI factories” as the new industrial frontier. One gigawatt of power = $60 billion worth of compute infrastructure. Start penciling out 7–10 GW builds and you’re staring at GDP-scale facilities — with carpenters, welders, masons, sparkies, and IT crews manning the decks.

The kicker? That’s a new bull case for U.S. labor markets, right when macro cracks are starting to form. If this narrative gets political traction, it could front-load infrastructure demand and become a stealth offset to the tariff-driven industrial slowdown we’ve been tracking.

Meanwhile, Huang didn’t sugarcoat the dislocations: “Some jobs will be lost, every job will be changed.” But his call was net constructive. He pointed to San Francisco’s resurrection — fueled by AI’s return-to-office gravity — and sees a new wave of job creation in data curation, AI safety, and machine-learning ops.

Forget the CPU crowd. This is GPU-defined capitalism, and it’s reshaping software, industrial production, and macro strategy in real time.

Bottom line: this isn’t just an Nvidia story. It’s a structural macro pivot. As China and the U.S. load up for a generational tech race, the rotation into real-world AI infrastructure could front-run consensus by years. Keep an eye on semis, energy grid capex, trade labor indices, and sovereign digital infrastructure bills. This isn’t a bubble — this is the next battleground. And the tape is starting to sniff it out.