WSJ What’s News - U.S. Stocks Fall Sharply as Global Economic Outlook Remains Uncertain

Episode Date: April 10, 2025

P.M. Edition for April 10. Yesterday’s market rally gave way to declines as the impact of a trade war with China sinks in. Plus, services are a major U.S. export now being pulled into Trump’s trade wars. WSJ economics reporter Konrad Putzier joins to discuss. And the House passes a budget blueprint for President Trump’s “one big, beautiful bill.” We hear from Journal tax policy reporter Richard Rubin about what the blueprint lays out and what it leaves up for debate. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Unwrap the early days of your favorite hockey stars with Tim's new retrospective rookies hockey cards featuring exclusive NHL and PWHL players and retired legends. Collect them all only at Tim's at participating restaurants in Canada for a limited time. US stocks fell sharply as investors reckoned with an uncertain economic outlook. Plus how President Trump's tariffs threaten a major U.S. export, services. This could impact service exports by just damaging the American brand. And you're seeing this around the world. There's all these people that are now basically souring on American companies because they feel the U.S. is being hostile, is attacking their country through this trade war.

And the House has narrowly passed the budget blueprint for Trump's one big beautiful bill. But that may have been the easy part. It's Thursday, April 10th. I'm Alex Oscele for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. If yesterday's stock market rally was a party, today investors were feeling the hangover. U.S. stocks declined sharply as investors sorter through a global economic outlook that

remains uncertain despite drastic improvements over the past 24 hours. A softer-than-expected inflation report today did little to console investors. The market declines accelerated after the White House said the tariffs the U.S. now imposes on China added up to 145 percent, not the 125 percent it previously indicated. Stocks then pared those losses in afternoon trading. Bank stocks and tech shares were hit hard, retracing some of yesterday's epic gains. And Wall Street's fear gauge, the SIBO volatility index, was rising, though far below levels of earlier this week. The three major U.S. indexes fell sharply today. The Nasdaq, which posted its biggest gain in more than two decades yesterday, led the losses, ending more than 4% lower. The

Dow dropped about 1,000 points, or 2.5%. And the S&P 500 lost about 3.5%. New data from the Labor Department out today showed that inflation cooled unexpectedly last month. Consumer prices were up 2.4% in March from a year earlier, lower than February's gain of 2.8% and well below the 2.6% rise that economists expected. Prices excluding food and energy categories, the core measure which economists watch in an effort to better capture inflation's underlying trend, rose 2.8% again below forecast for a 3% increase. That was the smallest increase in the core measure since March 2021.

For more behind the numbers, I'm joined by WSJ economics correspondent Harriet Torry. So Harriet, these numbers don't take into account much of Trump's tariff policies because his liberation day wasn't until April, but normally a slowdown in inflation would be welcome news. Is it this time? This is definitely good news for consumers because they've been hit very hard by inflation over the past few years. And of course, it's good news for the Fed as well, because the Fed has been trying for

a long time to bring inflation back to 2%. However, this data is actually looking pretty stale now because tariffs have now been paused. There's been a lot going on since this report came out. And to be fair, some tariffs were coming into effect in March, but that didn't really show up in the data. We saw some very slight moves around in categories that are exposed to exports like apparel and things like that, but nothing particularly major. So it's almost like this report represents the calm before the storm. There were a couple of things that did show pretty significant price drops like hotel prices and gasoline prices that fell last month.

How worrying are these as signs of weakening domestic demand? Yeah, we did see some big swings in categories related to travel, such as airline fares. And economists that I spoke to did say this could be a sign that people are cancelling trips. Maybe just want to stay home and see how the economy plays out. So that is a sign that potentially consumers are getting a little bit edgy because often when the economy slows down, the places that people will cut their spending is in discretionary categories, things like travel and hotels.

That was WSJ Economics correspondent Harriet Torry. Thank you, Harriet. Thanks. Inflation may have cooled off for many goods last month, but for eggs, it heated up. The same Labor Department data showed that the average price of a dozen large grade A eggs more than doubled in March from the year before, climbing above $6 for the first time. Still, relief could be on the horizon. The price hike from the prior month was less dramatic than increases in January and February. Wholesale prices declined and demand for eggs usually falls after the winter holidays, helping to relieve some price pressure. And the avian flu outbreaks that have squeezed egg supplies

are starting to ease as farmers rebuild stocks. House Republicans have narrowly approved the budget blueprint for President Trump's one big, beautiful bill. The vote marks a major step forward for Trump's legislative agenda, and it notches a much-needed win for the White House after President Trump put some of his tariffs on hold yesterday. The budget approved today will provide only a minimal guide for the work ahead. It contains a House plan and a Senate plan that don't match each other.

The House plan requires at least $1.5 trillion in spending cuts over a decade and allows $4 trillion in tax cuts. If spending cuts go up, the tax cuts can increase. The Senate plan, meanwhile, locks in just $4 billion in spending cuts and allows more than $5 trillion in tax cuts. WSJ tax policy reporter Richard Rubin tells us that, in many ways, for Republicans, getting the bill through the House was the easy part. This is really just the framework, the blueprint for what the president calls his one big,

beautiful bill. And so it sets the basic budget parameters that will then allow them to write real legislation in the next couple of months that extends tax cuts, adds more tax cuts, cuts some spending, adds spending on border security and national defense. What exactly that all looks like is very much not known right now. We know the contours and the outlines, and this provides kind of the structure for it. But this is really, as a lot of lawmakers emphasize, just that first step. Coming up, you can't put a tariff on services. But this major US export is now being pulled into Trump's trade wars.

That's after the break. President Trump has said that tariffs can help close the massive U.S. trade deficit in goods, which he sees as a sign of economic weakness. But that's only part of the trade story. Though the U.S. imports more goods than it exports, the country exports a lot of services, a category that includes things like travel, credit services, and computer software. Trump didn't take services into account in his tariff math, but they're still being affected by his trade wars.

WSJ Economics reporter Konrad Puzier is here to tell us more. Conrad, how important are services to the U.S. economy? Conrad Puzier, WSJ Economics Reporter They're incredibly important. They're 80% of the U.S. economy roughly. And the U.S. now runs a goods trade deficit, but is really a services export champion. Social networks like Facebook and Instagram, financial products, the big banks and asset managers, all those things are really successful American exports and they're hugely important to the U.S. economy. There's one grain of salt though that you have to take with some of these export figures

is that some of the services exports aren't actually all that real because there is a lot of tax avoidance stuff that's going on that kind of inflates some of these bilateral trade service numbers. So countries can't put tariffs on other country's services. That seems kind of obvious. But there are things they can do to chip away at them, right? What are some of those things? Yeah, it gets a little bit harder going after services, right? Because they don't go through a ports, they don't go through a customs office. So tariffs don't really work all that well. But what other countries can do if they

want to go after US service companies in retaliation for Trump's tariffs is you can tax them. You can fine them. You can otherwise restrict their operations. And there's all these precedents for that. Like Canada, for example, has a digital services tax. And the EU is quite obviously considering something similar as well. So then how could Trump's tariffs affect the US services industry?

Trump's tariffs obviously aren't directly affecting the services industry because they're only on goods but indirectly they can very well affect the US service sector and US service exports in a number of ways and the most obvious one is if this trade war leads to lower global economic growth, that's really bad for American service companies. Another way in which this could impact service exports is by just damaging the American brand. And you're seeing this around the world.

There's all these people that are now basically souring on American companies because they feel the US is being hostile, is attacking their country through this trade war, and that makes them more reluctant to buy American services. That was economics reporter Conrad Puzier. Thank you, Conrad. Thanks for having me. As President Trump's policy changes with on-again, off-again tariffs, consumers are

grappling with uncertainty about whether goods will be available in the future and whether they'll be able to afford them. For some who remember the early days of COVID all too well, the instinct is to stock up on everyday goods and accelerate bigger purchases. WSJ Economics reporter Rachel Ensign joins me now. Rachel, what are the kinds of things that people are stocking up on? So, the things that people are stocking up on? So the things that people are stocking up on, so far cars is probably the thing that is clearest. And then they're buying stuff that's similar to cars,

things that are expensive, but you need. So phones, I talked to a owner of a Verizon store in Williamsburg in Brooklyn, and he said someone came in with an article saying iPhone prices could go over $3,000 with the new tariffs. So he was buying the phone today. And then we also spoke to folks who are stocking up on the kinds of non-perishable things that folks stocked up on during COVID. How different is this disruption from that during COVID?

On one hand, it's a very different economic moment. After the first few months of COVID, people actually had a lot of money. People were sitting at home, not going out. So they had a lot of extra funds to spend on stocking up. Now, some folks are stocking up. But the reality is most Americans don't really have a lot of extra savings.

And they've been cutting expenses They're feeling very pinched So the question is whether those folks who have a thousand dollars to go buy a new iPhone are going to be Balanced out by the people who are just in complete cost-cutting mode That was WSJ economics reporter Rachel Insine. Thanks Rachel. Thanks for having me economics reporter Rachel Ensign. Thanks, Rachel. Thanks for having me. Most working age Americans say they expect to retire at 65. But in reality, it doesn't always work that way.

According to the Employee Benefit Research Institute, about one in five retirees reported leaving a career at age 55 or younger. There are advantages to retiring earlier than the national median age of 62, like enjoying more free time and good health. But there can be some downsides, especially where money is concerned. Anne Turgesson, who covers retirement and personal finance for the Journal, told our Your Money Briefing podcast why retiring early can be financially tricky.

First of all, if you're taking money from your savings, from your 401k or IRA or any form of savings, you're increasing the number of years that your nest egg has to support you. And this is the reason why people often get part-time jobs, because they want to reduce the strain on their savings. There's also health insurance, which is huge. Once you're 65, you can go on Medicare, but before that, you can't.

So for each of them, they had to solve this problem. To hear more from Anne, listen to today's episode of Your Money Briefing. And that's what's news for this Thursday afternoon. Today's show was produced by Pierre Bienamé and Anthony Bansi with supervising producer Michael Kosmitis. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning.

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