Breakfast News: The War Of The Words
April 8, 2025
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Monday's Markets |
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| S&P 500 5,062 (-0.23%) |
| Nasdaq 15,603 (+0.1%) |
| Dow 37,966 (-0.91%) |
| Bitcoin $78,538 (-1.12%) |
1. Tariff Standoff Continues
China has threatened to retaliate in kind if President Trump further increases tariffs, vowing to "fight to the end" if the U.S. insists on adding a further 50% import levy. EU Commission President Ursula von der Leyen urged China to "to support a strong reformed trading system" with a responsible, negotiated solution. As investors weigh these comments, U.S. futures suggest markets will open higher this morning.
- "They're gonna have to buy our energy from us": Trump also targeted the European Union, with the suggestion the $350 billion trade deficit could be wiped in a week if they stepped up U.S. energy purchases. He rejected a zero-for-zero tariff proposal, which would involve both sides removing levies on industrial goods and cars.
- Record 29.13 billion shares changed hands: Buyers stepped in to pare stock losses following a later refuted report of a tariff pause, even with all three major U.S. stock indices hitting steep intraday lows and the CBOE Volatility Index (VIX) closing at the highest level in five years.
2. Apple Shifts Focus From China to India
Apple (AAPL 0.83%) is rumored to be looking to send more iPhones to the U.S. from India to offset the China tariffs, as a temporary measure to deal with the recent administration's announcements.
- Previously slated to make 25 million iPhones in India this year: Analysts from JPMorgan (JPM 2.03%) anticipate Apple would need to raise prices by 6% to negate the hit of the higher China tariff. India has a 26% levy currently imposed, significantly lower than the 54% effective Chinese rate.
- "Almost every customer asked me if prices were going to go up soon": One benefit of the rising import levies is surging demand in retail stores to purchase Apple products. Employees commented it was akin to a busy holiday season, with reports U.S. retail stores saw higher sales last weekend than in prior years.
3. Nvidia in Acquisition Mode
Nvidia (NVDA +0.10%) has reportedly closed a deal to buy Lepton AI, a server rental company only founded a couple of years ago, with a price tag running into the hundreds of millions of dollars.
- $11 million funding round just two years ago: Lepton AI has grown rapidly, focusing on renting servers equipped with Nvidia graphic processing units (GPUs). The purchase allows Nvidia to get access to the rental market and diversify revenue further away from hardware sales.
- Huang happy to get the wallet out: The deal suggests a desire to provide end-to-end solutions in the AI space, with the ability to grow inorganically via acquisitions. It comes as reports circulate about Nvidia buying Gretel Labs, a synthetic data provider for AI model training, for over $320 million.
4. Enterprise Stocks in Focus
Palantir Technologies (PLTR 0.34%) closed over 5% higher, with other enterprise software stocks such as Salesforce (CRM +4.30%) and ServiceNow (NOW +5.73%) rallying as investor sentiment improved.
- Shaken up with the general market rout: Enterprise software stocks have suffered over the past week, with concerns over tariffs prompting a slowdown in IT spending. The iShares Expanded Tech-Software Sector ETF is down over 13% in the past month.
- Positive noises coming from the sector: Rule Breakers recommendation Salesforce just had its first $10 billion quarter, with CEO Marc Benioff recently flagging customer adoption of key products is happening faster than expected. Stock Advisor rec ServiceNow announced a raft of new and expanded partnerships as part of the latest results.
5. Foolish Fun
What's something you think investors underrate when evaluating leadership? Debate with friends and family, or become a member to hear what your fellow Fools are saying.
