Evening Briefing: Americas

The S&P 500 ended the quarter down 4.6%, its worst performance in three years. The Nasdaq 100 posted its worst quarter in nearly three years, down 8.3%, after a pair of warnings last week fanned anxieties about a possible pullback in the hundreds of billions of dollars flowing into data center infrastructure. Making matters worse for the US, the dollar hasn’t been behaving as normal, raising fears that America’s radical policy turns are opening the door for rival currencies to become havens.

Trump’s trade war continues to fuel concern the US economy could stall. Most economists still don’t anticipate America will fall into recession in the next year, but they do say the chance of a contraction has increased. And while many economists have spent the past three years being wrong on recession calls, another worry is the risk that a slowdown in growth will occur alongside accelerating inflation, the dreaded scenario known as stagflation.

Still there was some good news for Trump on Monday, as almost half of Americans said in a new poll that they approve of his handling of immigration. The survey’s bad news for the 78-year-old Republican however was that slightly more disapprove. And on every other issue Americans were asked about, his disapproval rating was higher.

Garnering the least support in the Associated Press-NORC poll was Trump’s signature initiative so far—tariffs. Some 60% of Americans disapprove of his trade tactics while 58% disapprove of his handling of the economy in general.

On Wednesday, the tariff issue may be front and center again if Trump follows through on a threatened new round of levies. But as our Supply Lines newsletter explores today, many of Trump’s tariff orders may violate existing federal laws and the US Constitution. And as with the facial unconstitutionality of Trump’s latest musings on a third presidential term, what the law is—or will be—could eventually be decided by the US Supreme Court. —David E. Rovella

What You Need to Know Today

The head of the International Monetary Fund said uncertainty around Trump’s threatened tariffs risks denting global economic activity. The fund is seeing signs in recent data that worldwide consumer and investor confidence is weakening “and we know that then translates into impacts on growth prospects,” IMF Managing Director Kristalina Georgieva said. “The sooner there is more clarity, the better,” she said in an interview with Reuters on Monday. “Because uncertainty—our research shows—the longer it goes, the more it may negatively impact growth.”

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China’s factory activity expanded this month at the fastest pace in a year, a new report showed, just as threatened US tariffs could further strain trade ties between the world’s two biggest economies. The new data offer a snapshot of China’s economic health just before Trump says he will press ahead with reciprocal tariffs. China has warned it will retaliate if he goes ahead with the levies. Chinese Premier Li Qiang said this month that the country is prepared for “shocks that exceed expectations,” expressing confidence that the government can reach its growth target of about 5% this year. Economists have said Beijing may need to unleash trillions of yuan in stimulus to hit that goal if tariffs surge.

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Cantor Fitzgerald biotech analysts slammed the leadership of US Health and Human Services Secretary Robert F. Kennedy Jr., calling on the Trump administration to “re-evaluate” his role after a top vaccine official stepped down. Kennedy, a longtime critic of vaccines and the proven science behind them, “is steering this country into dangerous territory based on his own whims and invalidated beliefs,” analysts Josh Schimmer and Eric Schmidt wrote. “He’s ventured far outside of his swim lane. It’s time to take him out of the pool.” The unusually forceful note, which the duo sent out to clients midday Monday, signals a growing backlash after the ouster of a top Food and Drug Administration official on Friday. Biotech and vaccine stocks tumbled on the news, with the SPDR S&P Biotech ETF dropping as much as 6%. The comments were also notable because Howard Lutnick, Cantor’s former chief executive officer, is now Trump’s commerce secretary.

It doesn’t look like anything can slow the market for exchange-traded funds. While tariff and economic news have commanded investor attention, ETF issuers have kept busy: they’ve churned out more than 230 new products in the US, a record for a first quarter in data going back to 2015. By comparison, the first three months of 2024—a year which ended up seeing both a record 700-plus launches and more than $1 trillion in fund inflows—saw 174 brand-new ETFs. To Amrita Nandakumar, president of ETF sub-adviser Vident Asset Management, it’s possible 1,000 new products could launch this year. “The increased adoption of ETFs by financial advisers represents the most significant factor driving the momentum of new ETF launches,” she said.

Giorgia Meloni had hoped a line in to Trump would place her at the center of European politics. Instead, her failure to bridge the gap with the US is starting to damage her position both at home and abroad. The Italian prime minister, whose far-right party’s roots stretch back to members of fascist dictator Benito Mussolini’s government, was the only European leader to attend Trump’s January inauguration. She also met with the Republican at his home in Florida, had close ties to Trump aide Elon Musk and said she was expecting a visit to the White House. Her idea is said to have been to use that trip to secure a partial carve out from US tariffs on imports from the European Union. But it hasn’t quite worked out that way.