1 Dow slides to new 2026 lows for the second straight day — S&P 500 tests 200-day moving average at 6,600; Nasdaq drops 1.1% below its own 200-day; Mag 7 all red; VIX spikes to 25; Russell 2000 turns negative for the year; worst month since September 2022
This USA Canada intelligence brief opens with the market rout that is accelerating across North America. The S&P 500 fell 0.53% in early trading to 6,589 after closing at 6,624 yesterday — its lowest level since November 2025. The Dow dropped over 300 points midday. The Nasdaq Composite fell 1.1% to test the 22,000 level, well below its 200-day moving average of 22,223 which it breached yesterday. This is part of The Rio Times’ daily intelligence coverage of the United States and Canada for the Latin American financial community.
The selling has been broad and relentless. The Russell 2000 small-cap index hit a 16-week low at 2,449, turning negative for the year. The CBOE Volatility Index surged 13% to close at 24.92 yesterday and remains elevated. JPMorgan warned that if the S&P breaks below the 200-day moving average decisively, the next support may not emerge until the 6,000-6,200 range — a further 6-8% decline from current levels.
The proximate cause is the Iran war’s escalation into a direct assault on Gulf energy infrastructure. Iranian missiles struck Qatar’s Ras Laffan LNG hub — the world’s largest — causing “extensive damage.” Drones hit a Saudi refinery and two Kuwaiti refineries. Brent crude spiked above $119 intraday before settling near $114, up over 6%. WTI briefly touched $100 before easing to $97. The Brent-WTI spread has blown out to its widest in 11 years.
The Fed’s hawkish dot plot from yesterday compounded the damage. Seven FOMC members projected zero rate cuts for 2026, and the median dot showed only one cut remaining. Powell warned that “what happens in the Middle East will be a big factor” in inflation. The S&P 500’s forward price-to-earnings ratio has compressed to 20.9 from a peak of 22 earlier this year, but Schwab’s analysts noted it remains above the five-year average of 20 — suggesting the valuation reset may not be complete.
2 FedEx reports tonight as global trade faces its biggest test — the logistics bellwether’s shares already down 10% since the war began; Hormuz rerouting reshaping shipping lanes; Accenture reports on corporate AI spending; Micron tanks 7% on capex shock despite record-smashing quarter
FedEx reports fiscal Q3 earnings after the bell tonight, and the report carries outsize significance as a barometer of global trade health during war. Analysts expect EPS of $4.12-$4.14 on revenue of $23.4 billion. The stock has fallen roughly 10% from its February 27 record high as investors price in the war’s impact on logistics costs and shipping volumes. The company’s “One FedEx” integration and DRIVE cost-cutting programme have been overshadowed by macro headwinds.
This morning’s earnings slate delivered a mixed signal. Darden Restaurants reported fiscal Q3 results that beat on revenue — total sales rose 5.9% to $3.35 billion driven by 4.2% same-restaurant sales growth. Olive Garden same-store sales grew 3.2% and LongHorn Steakhouse surged 7.2%. The consumer appears resilient at the casual dining level, but Darden also announced it will close 14 Bahama Breeze locations and convert the remaining 14 to other brands.
Micron Technology’s results from last night were spectacular on paper — revenue nearly tripled to $23.86 billion, EPS of $12.20 crushed the $8.73 consensus, and Q3 guidance of $33.5 billion in revenue implies growth exceeding 200% year-over-year. But shares tanked 7% after the company raised FY2026 capex guidance from $20 billion to $25 billion for its HBM4 memory ramp. The market punished the capex intensity even as demand remains sold out through calendar 2026.
3 Nvidia GTC final day — NemoClaw agentic platform unveiled; open-source panel with Mistral and Perplexity CEOs; $2 billion Nebius investment; but shares fall as macro drowns the AI narrative; New Street adds to “Best Idea” list anyway
The GPU Technology Conference wraps up its four-day run in San Jose today with Nvidia shares under pressure despite a barrage of product announcements. Nvidia fell over 2% on Wednesday and remains below its GTC opening levels. The company’s $1 trillion revenue projection through 2027 from the Monday keynote — implying $50-70 billion more than consensus — failed to sustain a rally as the macro selloff overwhelmed sentiment.
The headline software launch is NemoClaw, an enterprise-grade stack for deploying always-on AI agents built on the open-source OpenClaw platform. Jensen Huang called OpenClaw “the operating system for personal AI” and compared its significance to Mac and Windows. NemoClaw installs in a single command, adding Nvidia Nemotron models and the OpenShell security runtime for privacy-controlled autonomous agents. The company also released Nemotron 3 Super, a 120-billion-parameter model optimised for agentic workflows.
Today’s closing sessions include a high-profile open-source panel featuring CEOs from Mistral, Perplexity, and Cursor — the developer tools companies riding the agentic AI wave. Nvidia also announced a $2 billion investment in Nebius Group’s AI infrastructure and unveiled the Physical AI Data Factory Blueprint for robotics and autonomous vehicle development. Disney demonstrated a live robot — Olaf from Frozen — powered by Nvidia’s Jetson platform.
New Street Research added Nvidia to its “2026 Best Idea” list despite the selloff, citing the $650 billion cloud capex wave still building. But the timing illustrates the market’s dilemma: AI fundamentals remain strong while every other macro variable deteriorates. Nvidia employees are now 100% on AI coding tools like Claude Code and Cursor, Huang disclosed — a sign that the productivity thesis his company sells is also the one it has bet its own operations on.
4 Canada’s CUSMA July deadline tightens the vise — Trump threatens 100% tariffs if Carney deals with China; Carney calls relationship a “rupture”; Oxford Economics warns recession if agreement torn up; unemployment 6.7%; Macklem’s hawkish hold leaves zero policy cushion
The mandatory review of the Canada-United States-Mexico Agreement begins formally in July, and the political backdrop has deteriorated sharply. Trump called CUSMA “irrelevant” and “transitional” in meetings with PM Carney, and threatened 100% tariffs on all Canadian goods if Ottawa pursues a trade deal with China. Carney described the relationship as a “rupture” during a speech in Australia, saying CUSMA has been “effectively broken in the short term by US actions.”
Canada-US Trade Minister Dominic LeBlanc met with USTR Jamieson Greer in Washington last week for what both sides described as “constructive and substantive” discussions. But Greer has expressed scepticism about the agreement and suggested the US may negotiate separate bilateral deals with Canada and Mexico rather than a three-way renewal. Trump has publicly said the US could “let CUSMA expire.”
The economic stakes are existential for Canada. CUSMA-compliant goods remain exempt from the 10% global tariff Trump imposed after the Supreme Court struck down his IEEPA-based tariffs. If CUSMA is terminated, Canadian exports would face at minimum a 10% tariff overnight — and potentially far higher under sector-specific duties that already hit steel, aluminium, autos, and lumber. Oxford Economics modelled a deep recession under the termination scenario, requiring another half-point of BoC rate cuts.
Meanwhile, the Bank of Canada’s hawkish hold at 2.25% leaves Macklem with no room to cushion a CUSMA shock. CPI has fallen to 1.8%, but the governor warned he “will not let energy effects become persistent inflation.” Unemployment stands at 6.7%, and the job gains from late 2025 were “largely reversed” in January and February. Canada faces the most challenging combination of trade risk and monetary constraint since the original NAFTA negotiations in the early 1990s.
5 Powell-Warsh succession chaos deepens — Powell declares he will serve as “chair pro tem” if Warsh not confirmed by May 15; vows to remain on Board until DOJ probe concludes; seven FOMC members dotted zero cuts; Tillis immovable; Pirro appealing; institutional crisis reshaping the rate outlook
Jerome Powell made two consequential announcements during yesterday’s press conference that reshape the Fed succession timeline. First, he said he would serve as “chair pro tem” if Warsh is not confirmed by the time his chair term expires on May 15 — as the law provides. Second, he declared he would not leave his Board of Governors seat, which runs until January 2028, until the DOJ investigation is “well and truly over with transparency and finality.”
Both statements represent a direct challenge to the Trump administration’s strategy of pressuring Powell to resign. Judge Boasberg’s March 13 ruling quashing the DOJ subpoenas found “abundant evidence” the probe was designed to harass Powell into lowering rates or departing. US Attorney Jeanine Pirro called the ruling “outrageous” and filed an appeal that will extend the legal battle through the summer. The combination of Powell’s defiance and the appeals process means the transition could remain unresolved well past May 15.
Senator Thom Tillis remains the decisive figure. He has vowed not to vote for any Fed nominees — including Warsh — until the probe is resolved. After meeting Warsh last week, Tillis praised his qualifications but reiterated that “this is about bedrock principle of Fed independence.” Senate Banking Committee Chairman Tim Scott said he hopes the investigation “goes away” so confirmation can proceed, but the appeals process makes that unlikely in the near term.
For markets, Powell’s announcements created what analysts call a “Powell permanence premium” — the expectation that the more predictable, institutionalist Powell will remain at the helm longer than previously assumed. Morgan Stanley expects rate cuts once Warsh arrives but his confirmation remains unscheduled. The seven FOMC members who dotted zero cuts for 2026 suggest that even without a leadership change, the committee’s centre of gravity has shifted hawkish in response to the oil shock. The rate outlook now depends as much on a courtroom and a Senate committee room as it does on economic data.
