Markets are rallying back this pre-market, after overseas indexes pulled themselves off the mat — +2.5% on the FTSE (London) and DAX (EU) — following dire market activity to start this full trading week of the global trade war. The Japanese Nikkei index rose +6% off 18-month lows overnight, on hopes that bilateral trade talks between the U.S. and Japan are underway.

That said, we’re off peak levels this early morning, where the Dow was up +3.2% and the S&P 500 and Nasdaq were +2.9% and +2.7%, respectively. Tariff policy still has a ways to go to achieve clarity for market participants: while U.S. Treasury Secretary Scott Bessent cheered the trade talks with Japan, counselor to President Trump Peter Navarro insists tariffs are not a negotiation.

Meanwhile, the U.S.’s two biggest trading partners, Canada and China, appear to be digging their heels in for a long-term trade war with the U.S. China, in particular, vows to “fight to the end” of this trade war. Because they were a target of President Trump’s during his first term at the end of the 20-teens, they’ve had a bit more time to game out their strategies. Then again, headlines that come out of Beijing are not always soundly based in truth.

Small Business Index Lower in March

The NFIB Small-Business Optimism Index for March came out early this morning, with a headline just under its half-century average to 97.4. This is down from the 98.7 expected (70 basis points [bps] above that long-term average) and 100.7 reported for the prior month. The Uncertainty Index dropped to 98 from 104 reported for February.

Among the biggest challenges cited by small business owners, Labor Quality led the way at +19%, just above Taxes at +18%, which has gained in importance recently — not on higher tax rates hitting small businesses, but perhaps expectations for corporate tax cuts forthcoming once the DOGE/tariff smoke clears. Labor Costs also made the list of concerns, +11%.

What to Expect from the Stock Market Today & This Week

As market participants go shopping this morning — the Dow is +1100 points, the S&P 500 is +135 and the Nasdaq +430 — we will continue to listen for signs of progress in this trade war. At the same time, companies and investors will continue adjusting to our new realities. Trade tariffs haven’t been this big a part of U.S. policy for a century.

San Francisco Fed President Mary Daly speaks this afternoon, and it might be informative to compare her comments today with the minutes of the last Fed meeting four weeks ago, which come out Wednesday afternoon. Also tomorrow we’ll see Q1 earnings for Delta Air Lines (DAL Quick QuoteDAL - Free Report) which precedes the big banks like JPMorgan (JPM Quick QuoteJPM - Free Report) reporting Friday.

Thursday brings us new inflation data — albeit backward-looking — with a new Consumer Price Index (CPI) for March. Currently, expectations for the Inflation Rate are expected to come down 20 bps to +2.6%. Closer to our present situation will be Weekly Jobless Claims out Thursday morning, which are expected to remain in-range of our long-term health in the labor market.