The 'Sarge-Folio' Surges
Amid the historic rally on Trump's tariff turn, my stocks see huge percentage gains.
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It was unexpected to say the least, and overnight traders have faded the move somewhat. Still, the surge experienced by U.S. financial markets during the regular trading session on Wednesday was just incredible. There was no leak. No rumor, outside of the one that had been denied a day earlier. U.S. stock markets had just about priced in the "reciprocal" global tariffs that President Trump had announced last week. That policy move had required days of pain for net long portfolio managers.
On Wednesday, with less than three hours left in that regular session, the Trump administration announced a 90-day pause for those "reciprocal" tariffs on almost 100 trading partners. The move left the base tariff rate of 10% in place across the board for all nations that had reached out to initiate negotiations with the U.S. The pause will remain in place as long as whatever concessions offered by these nations are considered acceptable and progress is being made. Canada and Mexico remain exempt from this schedule of tariffs but also remain subject to the 25% tariffs on non-USMCA compliant exports to the US for their perceived role in what the administration sees as the fentanyl crisis.
There was one key nation that was not offered a 90-day pause for negotiation but rather was slapped with an increase in their respective tariff rate to 125%. That would be mainland China. China had retaliated to the imposition of President Trump's "reciprocal" tariffs with increased tariffs of their own. With that, the president pivoted from a trade war on most of the planet to an apparent isolation of China and a trade war that has seemingly developed into a one-on-one situation or maybe a one-on-many situation depending on how the dominoes fall.
Shortly after the U.S. paused the implementation of the larger portion of the just enacted tariffs on most countries, Goldman Sachs GS rescinded their recent "recession" call for the U.S. economy and the race back into stocks was on. Fueled by a lightning quick algorithmic response, a short squeeze and probably something of a gamma squeeze, US stocks in just a couple of hours, put together a rally for the ages.
Marketplace
These numbers are really quite incredible. For Wednesday, the Nasdaq Composite ran 12.16%, as the S&P 500 gained 9.52%. Moving down in market cap, the Russell 2000 popped for a gain of 8.66%, while the S&P Midcap 400 advanced 9.29%. Moving on to the specialized indexes, the KBW Banks gained 8.98%, the Dow Transports ran 10.1% and the Philadelphia Semiconductor Index absolutely soared, moving up a jaw-dropping 18.73%.
The move by the Nasdaq Composite was the second largest daily gain in percentage terms in the history of that index, which was launched in 1971. Only a 14.17% gain on January 3, 2001, which I remember well, outperformed what the index did on April 9th, 2025. For the S&P 500, Wednesday was its strongest day in percentage terms since October 2008.
The semiconductors were helped by more than the administration's pivot on tariffs while negotiations are underway. The president's team also paused the implementation of an expected export ban on Nvidia's NVDA H20 GPUs to China. I don't know how many of these chips Nvidia will sell as both nations have now placed almost prohibitive tariffs upon each other's exports, but this ban, which had been priced in, is not moving ahead.
Nvidia's known, large Chinese customers include Alibaba BABA, Tencent TCEHY, and ByteDance (BDNCE), all of whom have placed large orders for these chips this year. Joining Nvidia in the oversized chip rally were other chip designers with considerable Chinese businesses such as Qualcomm QCOM, Marvell Technology MRVL, Qorvo QRVO and Advanced Micro Devices AMD.
The Sarge-folio
Away from short-term trading, because that is different, and I can't be sure, but I think the Sarge-folio may have had the greatest single day in percentage terms of my lifetime on Wednesday. No, we have not retaken the all-time highs. Still a way to go there, but the core portfolio was up 15.5% for the Wednesday session as SoFi Technologies SOFI, Rocket Lab USA RKLB, Palantir Technologies PLTR, Peloton Interactive PTON, CrowdStrike Holdings CRWD and SentinelOne S ran 19.9%,19.9%,19%,17.4%,16.3% and 15.7% respectively.
Breadth
This comes straight from the "Holy Moly" department. All 11 S&P sector SPDRs ended the day comfortably in the green, led by Technology XLK and the Discretionaries XLY. Those two funds gained 13.43% and 10.89% respectively. As one might have expected, the bottom four slots on the daily performance tables went to defensive-type sectors. That said, even our eleventh-place finisher, the Staples XLP, gained an impressive 3.88% for the session.
Winners beat losers by a rough 16 to 1 at the NYSE and by a "mere" 11 to 2 at the Nasdaq. Advancing volume took a commanding 79.2% share of composite Nasdaq-listed trade and an incredible 98.5% (not a misprint) share of composite NYSE-listed activity.
Here's the kicker. Yes, we're pretty sure that some traders were caught short and there was a short squeeze (which must have hurt like heck coming after a margin call), and we're pretty sure that at least some dealers were not positioned well as short-term call options were snapped up aggressively, causing something of a gamma squeeze. Still, aggregate trade increased significantly on a day over day basis (+28.1% for NYSE-listings, +28.4% for Nasdaq-listings), and at least a decent enough portion of that likely came organically, from portfolio managers increasing long-side exposure.
The Chart
Readers will see on Wednesday, what is obviously a "day one" bullish change of trend. As mentioned earlier this week, our "two-day" day one bearish turn had not been confirmed. This goes away now that this index has moved higher on such volume. Now, we look for a bullish "confirmation day" as unlikely as that seemed twenty-four hours ago.
With equity index futures trading lower on Thursday morning and key inflation data due this morning, the set-up is there for some give-back on Thursday. Like it or not, that is precisely how a market would set up technically, a day of bullish confirmation. A controlled sell-off that does not wipe out the gains made on Wednesday would be a welcome development, obviously for traders, but also for investors who understand such things.
Though this may sound optimistic, investors need to keep in mind that the S&P 500 is set to approach either its 50-day or 200-day simple moving averages. Those lines will show up either as resistance or upside catalysts (pivots) once they come into play. The index also faces a likely "death cross" in the not-too-distant future unless those lines can be retaken.
Treasuries
The U.S. Ten Year Note went out on Wednesday yielding 4.37%, after a surprisingly strong auction went off at 1 p.m. ET just ahead of the tariff news. This was up seven basis points for the day, but down from an intraday high of 4.46%. I see U.S. Ten Year paper paying as little as 4.27% overnight. The U.S. Treasury will auction off $22 billion worth of 30-Year-long bonds this afternoon.
Weapons Scrutiny
In addition to all of the above, on Wednesday, Pres. Trump signed an executive order that directs a sweeping review of the entire Department of Defense weapons procurement process. The order mandates a comprehensive evaluation of all major defense acquisitions with the focus on programs running more than 15% over budget or more than 15% behind schedule.
Among other programs, this will place focus upon the Air Force One replacement project, which is a Boeing BA deal, the F-35 stealth fighter aircraft program, which is primarily a Lockheed Martin LMT deal, and the Sentinel intercontinental ballistic missile program, which is primarily a Northrop Grumman NOC deal.
Economics (All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 224K, Last 219K.
08:30 - Continuing Claims (Weekly): Last 1.903M.
08:30 - CPI (Mar): Expecting 0.1% m/m, Last 0.2% m/m.
08:30 - CPI (Mar): Expecting 2.6% y/y, Last 2.8% y/y.
08:30 - Core CPI (Mar): Expecting 0.3% m/m, Last 0.2% m/m.
08:30 - Core CPI (Mar): Expecting 3.0% y/y, Last 3.1% y/y.
10:30 - Natural Gas Inventories (Weekly): Last +29B cf.
1:00 p.m. - Thirty-Year Bond Auction: $22B.
2:00 p.m. - Federal Budget Statement (Mar): Last $-307B.
The Fed (All Times Eastern)
09:30 - Speaker: Dallas Fed Pres. Lorie Logan.
10:00 - Speaker: Reserve Board Gov. Michelle Bowman.
10:00 - Speaker: Kansas City Fed Pres. Jeffrey Schmid.
12:00 p.m. - Speaker: Philadelphia Fed Pres. Patrick Harker.
12:00 - Speaker: Chicago Fed Pres. Austan Goolsbee.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: KMX (.66)
At the time of publication, Guilfoyle was long SOFI, RKLB, PLTR, CRWD, S, PTON, NOC equity.
