U.S. Stocks S&P 500 and Nasdaq — The Paradox of “Good News Is Bad” After Strong Non-Farm Payrolls

In March, non-farm payroll additions of 178,000 far exceeded expectations, and the unemployment rate fell to 4.3%. This should have been a sign of a healthy economy, but after the data was released, U.S. stock index futures plunged straight down. S&P 500 futures once fell by 1.2%, and Nasdaq 100 futures dropped by more than 1.8%. The reason is simple: the stronger the employment, the less the Federal Reserve dares to cut interest rates. CME federal funds futures show that the probability of a rate cut in June has fallen from 15% a week ago to nearly zero, and some people have even started discussing the possibility of “another rate hike.” #三月非農數據來襲

Currently, the S&P 500 is around 4,800 points, and the Nasdaq Composite is around 16,800 points; compared with the Q1 highs, it has retraced by about 6% and 9%, respectively. Tech stocks are the most sensitive to interest rates—AI leaders such as Nvidia, Microsoft, and Google have fallen on average by 10%-15% over the past two weeks. At the same time, the Middle East situation continues to heat up—after Trump’s April 1 speech, defense stocks and energy stocks rose against the trend, and companies such as Lockheed Martin and ExxonMobil have received inflows of safe-haven capital.

Three key variables will determine the direction of U.S. stocks in Q2:

1. April CPI (released on April 15): If core CPI rebounds due to energy-price transmission, rate-cut expectations will disappear completely, and U.S. stocks may dip further.
2. Progress in Middle East ceasefire talks: Turkey and Egypt are brokering; if there is a substantial breakthrough, a rapid drop in oil prices will ease inflation pressure and be beneficial for the stock market. Conversely, if the conflict escalates, energy stocks may benefit but the overall market will be under pressure.
3. Trump’s trade policy: 50% tariffs on steel, aluminum, and copper, and 100% tariffs on medicines have already sparked threats of retaliation from the EU and Asian countries. If the trade war expands, multinational technology companies and the manufacturing sector will be the first to be hit.

Strategically, in the short term it is recommended to reduce exposure to tech stocks and increase holdings in defensive sectors such as energy, defense, and consumer staples. The S&P 500’s 4,600-point level (near the 200-day moving average) is an important technical support; if it is lost, it may test 4,400 points.

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