Stocks closed lower yesterday, ending their 2-day winning streak. But the Dow is still up 1.88% from last week's lowest close. The S&P 500 is up 1.69%. And the Nasdaq is up 1.16%.

Worries over tariffs continue.

Although, U.S. Treasury Secretary Scott Bessent said yesterday that some tariffs might not have to go on (citing April 2 as the date when the U.S. produces a list of other countries' tariffs on us, and what we in turn will levy on them).

He said, "I am optimistic that on April 2, some of the tariffs may not go on because a deal is pre-negotiated, or once countries receive their reciprocal tariff number, right after that, they will come to us and want to negotiate it down." He continued by saying, "if you stop this, we will not put up the tariff wall. If you do, then we will put up the tariff wall to protect our economy, protect our workers, and protect our industry."

He closed by saying, "either the trade friction that these other countries have come down, and we get fair trade, and if they don't follow President Trump's lead, then he will raise the tariff wall."

We'll soon see what April 2^nd brings.

But tariff uncertainty is also affecting the Fed. In fact, they cited uncertainty over the President's tariff policy as one of the main reasons for pausing interest rate cuts.

However, once we get a better understanding of the scope of the tariffs, coupled with resumed progress on inflation, the Fed might be more inclined to restart easing monetary policy again.

But don't count on it at this afternoon's FOMC Announcement. The odds for a rate cut are at just 1%. And the next FOMC Announcement on May 7 only has a 17.5% likelihood of a rate cut. You have to go all the way out to June 18 before the odds turn favorably for a cut at 65.6%.

This afternoon's announcement will still be a must-see as it will include the Fed's Summary of Economic Projections (SEP), giving us an official outlook on the U.S. economy. We'll also hear from Fed Chair Jerome Powell afterwards at his customary Press Conference.

Speaking of economic outlook, the GDPNow estimate was updated once again yesterday, putting Q1'25 GPD at -1.8%, up from Monday's upwardly revised -2.1%. That was also upwardly revised from last week's -2.4%, which was upwardly revised from their worst take the week before of -2.8%. Only a few weeks ago it was forecasting +2.3%.

But it's worth noting that GDPNow's website states it's not an "official forecast," but a "running estimate of real GDP growth based on available economic data for the current measured quarter." And as that data changes, so will the estimate.

That's why everyone will be looking forward to the Fed's SEP today.

In other news, yesterday's Housing Starts and Permits report showed Starts at 1.501 million units (annualized) vs. last month's 1.350M and views for 1.382M. Permits were at 1.456M vs. last month's 1.473M and estimates for 1.450M.

Today we'll get MBA Mortgage Applications and the Atlanta Fed Business Inflation Expectations.

But, of course, the main event will be this afternoon's FOMC Announcement at 2:00 ET, and the Fed Chair Press Conference at 2:30.

A little bit of good news or some upbeat comments could go a long way to help put an end to the pullback/correction and begin the next leg up (if it hasn't already begun).

See you tomorrow,