C3.ai(US:AI) ZACKS·2025-06-13 19:36Market Reaction to Tariff News - The announcement of a tariff plan on April 2 led to significant market corrections, with the Dow down -13.9%, S&P down -17.8%, and Nasdaq down -23.4% by April 7 [1] - Following a 90-day pause on reciprocal tariffs announced on April 9, the S&P experienced its largest one-day advance (+9.52%) in over 15 years, leading to a double-digit recovery across major indexes [2][4] - By the end of the recovery period, the Dow was up 16.5%, S&P up 23.2%, and Nasdaq up 29.9% from their lows [2] Trade Agreements and Economic Outlook - The U.S. and China reached a "framework deal" that reduced tariffs significantly, with U.S. tariffs on China dropping from 145% to 30% and China's from 125% to 10% [4] - Treasury Secretary indicated the possibility of extending the tariff pause for countries showing "good faith" in negotiations, reflecting a shift from panic to optimism in trade relations [5] Historical Context and Market Trends - Historical data shows that pullbacks and corrections are common, with pullbacks occurring 3-4 times a year and corrections about once a year [7] - Previous bear markets have led to substantial recoveries, with the S&P gaining 74.9% within a year after the 2020 bear market and 22.4% after the 2022 bear market [9] Earnings and Inflation Trends - Despite tariff fears, earnings growth remains strong, with Q1'25 S&P earnings up 11.9% and forecasts for continued growth in subsequent quarters [29] - Recent inflation reports indicate a decline in core inflation to 2.8% y/y, with the Fed acknowledging significant progress towards its 2% target [26][27] Investment Strategies and Stock Performance - Stocks with a Zacks Rank 1 Strong Buy have historically outperformed the market, achieving an average annual return of over 24% [34] - Strategies focusing on small-cap growth and stocks making new highs have shown significant returns, with small-cap growth averaging 44.3% over the past 25 years [40][39]