The stock market surged higher yesterday following President Trump’s 90-day tariff pause, but now stocks are taking a breather.
The Vanguard Total Stock Market ETF (VTI) is down 2.9% in premarket trading Thursday morning.
Because Magnificent 7 stocks hold sway over the ETF’s performance, their moves today will influence how it trades today.
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After yesterday’s massive rally that saw the stock market add $5.5 trillion in value after President Trump paused for 90 days his sweeping tariff program, stocks look like they will take a breather today. The Vanguard Total Stock Market ETF (NYSEARCA:VTI) is down 2.9% in premarket trading Thursday.
Although Treasury Secretary Scott Bessent said the tariff pause was part of Trump’s “strategy all along” as it was meant to give the president strong leverage in negotiations, some analysts believe it may have had more to do with the bond market crashing.
10-year Treasury yields had shot higher this week, an atypical reaction to falling stock prices as bonds and stocks usually have an inverse relationship. The rising yields suggested bondholders like China and Japan, the two largest holders of Treasuries, were dumping them.
That eroded confidence in U.S. debt as a safe harbor, and in the dollar. Equally bad, it could have undermined Trump’s economic agenda. Many suspect Trump was willing to crash the market to bring bond yields lower, which would reduce interest payments on the federal government’s $35 trillion worth of debt. But the opposite happened.
While the tariff pause is helping bonds recover, the crisis is not fully over, which may be why the stock market is down this morning.
The Vanguard Total Stock Market ETF tracks the CRSP US Total Market Index, which includes over 3,600 stocks across large-, mid-, small-, and micro-cap companies listed on the NYSE and Nasdaq. Its goal is to mirror the performance of the U.S. equity universe, weighted by market capitalization.
Its largest holdings are in the technology sector, with Apple (NASDAQ: AAPL) being the biggest at 6.4% of the portfolio. It raced 15% higher yesterday, regaining its crown as the world’s most valuable stock, but is down 4.1% ahead of the morning bell.
Microsoft (NASDAQ:MSFT) is the second biggest position in VTI at 5.1%. It jumped 10% yesterday, but is off 1.4% this morning. Similarly, the third-largest holding, Nvidia (NASDAQ:NVDA), rallied hard yesterday, up nearly 19%, but this morning it is down 3.4% premarket.
It’s noteworthy, because just as the Magnificent 7 stocks account for nearly 28% of the value of the S&P 500, and were responsible for nearly 30% of yesterday’ market gains, their market cap weighting in VTI has an oversized impact on the ETF’s performance as well. The six largest positions in VTI are Magnificent 7 stocks. Tesla (NASDAQ:TSLA) is the 10th biggest holding. Its stock was up over 22% yesterday, but is falling 3.6% this morning.
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