Market Recap – Wednesday March 5, 2025

Stocks Rebound as Tariff Relief and Strong Services Data Lift Sentiment

U.S. equities bounced back from recent losses, with the Dow (+1.14%), S&P 500 (+1.11%), and Nasdaq (+1.46%) all closing higher. Big Tech led the recovery, alongside gains in autos, industrial metals, chemicals, and airlines. Energy stocks underperformed as crude oil fell 2.9% to its lowest close since September. Treasury yields climbed as global bond markets reacted to Germany’s “whatever it takes” moment for infrastructure and defense spending. Meanwhile, the dollar had its worst session since November, down 1.4%, while Bitcoin surged 3.9%.

Tariff Reprieve for Automakers Sparks Relief Rally

Markets found some relief after the White House confirmed a one-month delay in auto tariffs for Canada and Mexico, a temporary reprieve following intense lobbying from auto executives. While Commerce Secretary Lutnick suggested that a broader compromise could be in the works, the market remains skeptical about the ultimate scope of tariffs. Trump’s State of the Union address offered no hints of backing down on trade policy, reinforcing uncertainty around the economic impact.

Economic Data Shows Mixed Signals

• February ISM Services Index came in at 53.5, topping expectations, with both new orders and employment showing strength. However, the prices paid index climbed, raising inflation concerns.

• February ADP private payrolls disappointed, adding just 77K jobs, far below the 150K consensus, hinting at potential softening in the labor market.

• The Fed’s Beige Book reported slight economic growth since mid-January but flagged increasing tariff-related price pressures, with businesses across multiple districts expecting to pass on higher costs to consumers.

Stock Highlights: Big Gainers & Laggards

Winners:

• Chimerix (CMRX) +70.6% – Acquired by Jazz Pharmaceuticals in a $935M deal.

• Moderna (MRNA) +15.9% – CEO Stephane Bancel bought 160K shares, boosting confidence.

• General Motors (GM) +7.2% – Gained on auto tariff reprieve.

• Brown-Forman (BF.B) +10.1% – Earnings beat expectations, though broader macro concerns remain.

Losers:

• CrowdStrike (CRWD) -6.3% – Guidance disappointed on revenue and margin outlook despite strong Q4.

• Thor Industries (THO) -14.5% – EPS, EBITDA missed; cut FY25 margin guidance.

• Credo Technology (CRDO) -14% – Despite strong Q4, concerns over high revenue concentration from Amazon weighed on shares.

Here’s Our Take:

Cautious Optimism Amid Policy Uncertainty

Today’s rebound was driven by tariff relief, strong ISM services data, and cleaner positioning, but Trump 2.0 policy uncertainty remains a key risk. While growth concerns have escalated, Fed rate cut expectations have also increased, with around 75 bps of cuts now priced in for 2025. Investors should stay selective, watching how trade policy evolves and focusing on sectors with strong earnings resilience. The Fed’s Beige Book warning about rising costs due to tariffs reinforces the need for a balanced approach between growth opportunities and defensive plays.