US OPEN: Markets Turn Volatile After China Raises Tariffs to 84%

• Apple (AAPL.US) received an upgrade to "hold" from Jefferies following the stock's significant drop after last week's tariff announcements.

• Arista Networks (ANET.US) has the strongest ability among AI-related companies to protect its stock on the downside through share repurchases, according to Melius Research.

• Walmart (WMT.US) maintained its annual sales growth outlook of 3-4% despite President Trump's tariffs and weakening consumer sentiment.

• Delta Air Lines (DAL.US) withdrew its full-year financial guidance due to uncertainty surrounding global trade, signaling broader economic concerns.

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Major US indices are rebounding modestly after several days of steep declines, with the S&P 500 up 0.23% to 5022.0, the Dow Jones gaining 0.01% to 37753, and the Nasdaq leading with a 0.79% rise to 17363.76. The VIX volatility index has fallen -0.81% to 39.13, suggesting some easing of market fear. European markets present a mixed picture, with northern exchanges generally outperforming southern counterparts, as the VSTOXX index rises 2.42% to 36.03. Italy's FTSE MIB is up 0.21%, while Spain's IBEX 35 and the UK's FTSE 100 show declines of -0.93% and -0.69% respectively.

This tentative recovery comes despite China's announcement of new 84% tariffs on US goods in retaliation to President Trump's recent trade measures. Oil remains under pressure at around $55 per barrel, while pharmaceutical stocks face headwinds following Trump's comments about potential industry tariffs. Bridgewater founder Ray Dalio's warning of a "once-in-a-lifetime" breakdown in monetary, political, and geopolitical orders continues to resonate with investors, suggesting that while today shows some stabilization, significant market anxiety persists as the US-China trade conflict escalates and Treasury yields hover near 4.4%.

S&P 500 Sectors Show Mixed Performance. Source: Bloomberg Financial LP

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq 100, represented by US100, has broken above recent lows at 17,176, which marked the April low. Bulls need to reclaim this level to prevent further downside, while bears will aim for a break below the December 2023 low at 16,445 — a move that could open the path to even lower levels. The next key bearish target may be the December 2023 low, when US100 was trading around the 15,780 level. The RSI is currently at its lowest levels in recent years, signaling extreme weakness. Source: xStation 

Market News 

• Apple (AAPL.US) received an upgrade to "hold" from Jefferies following the stock's significant drop after last week's tariff announcements. Analyst Edison Lee maintained that Apple will likely be exempted from US tariffs given its investment commitments, but warned of further downside risk amid recession concerns and weak iPhone demand. The firm cut iPhone shipment estimates by 3.6%/7.7%/5.5% for FY25/26/27, translating to revenue expectation cuts of 2%/4.1%/3.5% respectively. Jefferies lowered its price target to $167.88 from $202.33, citing limited AI traction and structural issues including lack of advanced packaging solutions. Apple shares were down 1.2% in premarket trading.

• Arista Networks (ANET.US) has the strongest ability among AI-related companies to protect its stock on the downside through share repurchases, according to Melius Research. Analyst Ben Reitzes noted that Arista "may have the most dry powder to step up if needed" with excellent free cash flow and net cash of approximately $6.50 per share. "If tariffs are transitory, maybe an increased stock buyback is a good idea," Reitzes wrote, adding that Adobe "is picking up the pace of late" while Broadcom just authorized a new $10 billion repurchase program. Melius noted that hyperscalers like Microsoft and Oracle "really don't have much dry powder given Capex needs."

• Meta Platforms (META.US) faces allegations from whistleblower Sarah Wynn-Williams that the company undermined US interests and aided China's AI development. Wynn-Williams, former director of global public policy, plans to testify before the Senate Judiciary Subcommittee on Crime and Counterterrorism that Meta "started briefing the Chinese Communist Party as early as 2015" on critical emerging technologies including artificial intelligence, with "the explicit goal being to help China outcompete American companies." Meta spokesperson Andy Stone responded that the testimony is "divorced from reality and riddled with false claims," emphasizing that while CEO Mark Zuckerberg had been public about past interest in offering services in China, "we do not operate our services in China today."

• Walmart (WMT.US) maintained its annual sales growth outlook of 3-4% despite President Trump's tariffs and weakening consumer sentiment. However, the retail giant widened its first-quarter operating income guidance range, citing "less favorable category mix, higher casualty claims expense, and the desire to maintain flexibility to invest in price as tariffs are implemented." CFO John David Rainey expressed confidence, stating that "history tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business." Walmart shares declined 1.2% in premarket trading and were down 9.5% year-to-date through Tuesday's close.

• Delta Air Lines (DAL.US) withdrew its full-year financial guidance due to uncertainty surrounding global trade, signaling broader economic concerns. CEO Ed Bastian stated that "with broad economic uncertainty around global trade, growth has largely stalled," adding that revenue has "flat-lined" as consumer and business confidence dims. The airline is "acting as if we're going into a recession," Bastian told CNBC, and plans to keep capacity growth flat for the second half of 2025 while reducing unnecessary capital expenditures. Delta still expects Q2 adjusted profit of $1.70 to $2.30 per share, compared with analysts' expectations of $2.29, though it beat Q1 estimates with adjusted earnings of 46 cents per share versus the 39 cents expected.

• Samsung Electronics (005930.KS) and Google (GOOGL.US) announced a partnership to launch Ballie, a soccer-ball-shaped home robot that uses artificial intelligence and can project video onto walls. Samsung executive Jay Kim described the device as designed to "bring AI to life as a friend and as a true companion," while Google Cloud CEO Thomas Kurian compared it to "a personal BB-8 rather than an Alexa Dot." The yellow robot can roam around homes on small wheels, control smart home devices, manage calendars, answer questions, make calls, and play video through its built-in projector. Running on Samsung's Tizen operating system, Ballie can access content providers including YouTube and Netflix, with release scheduled for summer 2025 after years of delays.

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP