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US Markets Surge Amid Tariff Hesitations and Robust Business Activity Data

March 25, 2025
Globalfinserve

Wall Street Rallies on Trump’s Tariff Delays and Strong S&P Business Survey

Wall Street stocks surged on Monday, March 18, 2025, driven by growing optimism that the White House is reconsidering its sweeping tariff hikes scheduled for April 2. The rally was further fueled by better-than-expected corporate activity data from S&P Global’s flash U.S. business survey, which alleviated some concerns over a tariff-induced economic slowdown.

However, despite the upbeat headline figures, underlying details from the survey were less impressive, with U.S. manufacturing slipping into contractionary territory. As tariff uncertainties continue, investors are closely monitoring consumer confidence data and the Federal Reserve’s interest rate outlook.

✅ Key Highlights

  • Wall Street Rally:
    • US stocks climbed on Monday as tariff delays and strong corporate activity data lifted sentiment.
  • Tariff Hesitations:
    • President Donald Trump announced that while auto tariffs are imminent, not all planned levies will take effect on April 2, with potential exemptions for some countries.
  • S&P Global Business Survey:
    • The survey showed overall business activity exceeding forecasts, particularly in the services sector, while manufacturing lagged.
  • Federal Reserve Signals One More Rate Cut:
    • Atlanta Fed President Raphael Bostic indicated the Fed may only cut interest rates once more in 2025.
  • Consumer Confidence in Focus:
    • Investors are awaiting the Conference Board’s consumer confidence data, set for release on Tuesday, to assess the household sector’s sentiment.

1. Wall Street Gains on Tariff Delays and Business Optimism

✅ Stocks Surge on Tariff Optimism:
On Monday, the Dow Jones Industrial Average (DJIA) rose by 1.8%, while the S&P 500 climbed 1.5% and the Nasdaq Composite advanced by 1.9%.

  • The market rally was largely driven by growing optimism that the Biden administration may scale back or delay certain tariff hikes initially scheduled for April 2.
  • The White House’s announcement hinted that some countries may receive exemptions, easing market concerns.

✅ Key Market Movers:

  • Automotive stocks, which were previously under pressure due to looming tariff threats, outperformed, with companies like Ford (NYSE: F) and General Motors (NYSE: GM) gaining over 2.5%.
  • Tech and industrial stocks also rallied as tariff fears eased, boosting investor sentiment.

2. Trump’s Tariff Hesitations: Potential Exemptions

✅ Auto Tariffs Coming Soon:
President Donald Trump reiterated his commitment to auto tariffs, warning that they are “coming soon”. However, he clarified that not all levies will take effect on April 2, and some nations may receive exemptions.

  • The announcement came amid ongoing trade negotiations with key partners, including India, Mexico, and South Korea, which could receive tariff breaks.
  • This uncertainty over tariff timing provided temporary relief to the markets.

✅ Venezuela Sanctions:

  • In addition to auto tariffs, Trump issued an executive order imposing a 25% tariff on oil and gas purchases from Venezuela, while extending the deadline for Chevron (NYSE: CVX) to wind down its operations in the country.

✅ India’s Trade Concessions:

  • Meanwhile, India signaled its willingness to cut tariffs on $23 billion worth of U.S. imports as part of a bilateral trade deal currently under negotiation.
  • This move could ease trade tensions between the two countries.

3. S&P Global Business Survey: Strong Services, Weak Manufacturing

✅ Services Sector Outperforms:
The S&P Global flash U.S. business survey for March 2025 revealed that the services sector experienced a faster-than-expected rebound, reflecting resilient consumer demand and corporate activity.

  • The Services PMI climbed to 56.2, surpassing the forecast of 54.7 and marking its strongest reading in six months.
  • The services sector accounts for over 70% of the U.S. economy, making its recovery a positive indicator.

✅ Manufacturing Sector Contracts:

  • In contrast, the Manufacturing PMI fell to 49.8, indicating a return to contraction territory.
  • The decline highlights the vulnerability of the industrial sector to tariff hikes and global trade uncertainties.

✅ Impact on Markets:

  • The resilient services sector buoyed overall market sentiment, while manufacturing weakness raised concerns over potential supply chain disruptions.

4. Fed Signals One More Rate Cut in 2025

✅ Fed’s Cautious Rate Cut Outlook:
Atlanta Federal Reserve President Raphael Bostic stated on Monday that he now expects the Fed to cut its benchmark interest rate only once more by the end of 2025.

  • The cautious stance reflects the Fed’s concerns over sticky inflation, which may limit the need for multiple cuts.
  • Bostic’s comments added stability to the market, as investors revised their rate cut expectations.

✅ Impact on the Bond Market:

  • Bond yields remained steady, with the 10-year Treasury yield holding around 4.25%, as the market priced in fewer rate cuts for 2025.
  • The U.S. dollar strengthened slightly against major currencies following Bostic’s comments.

5. Consumer Confidence in Focus

✅ Consumer Sentiment to Drive Markets:
Investors are now looking ahead to the Conference Board’s consumer confidence report scheduled for release on Tuesday, March 19, 2025.

  • The report will indicate whether household sentiment is rebounding from its eight-month low recorded in February.
  • A stronger-than-expected reading could further boost market optimism, while weak data may dampen the recent rally.

✅ Retail and Consumer Stocks in Focus:

  • Retail and consumer-facing stocks will be closely watched, with companies like Walmart (NYSE: WMT) and Target (NYSE: TGT) poised to benefit from positive consumer sentiment.

✅ Key Takeaways for Investors

  1. Stock Rally on Tariff Delays:
    • US equities surged as tariff hesitations and robust services sector data lifted sentiment.
  2. Tariff Uncertainty Persists:
    • Trump’s tariff policy remains fluid, with some countries potentially receiving breaks.
  3. Manufacturing Weakness:
    • The manufacturing sector’s contraction raises concerns over industrial growth.
  4. Fed’s Rate Cut Outlook:
    • The Fed may cut rates only once in 2025, reflecting inflation concerns.
  5. Consumer Confidence in Focus:
    • The Conference Board’s consumer confidence data will shape market sentiment this week.

✅ Conclusion: Markets Rally Amid Tariff Uncertainty

The US stock market rallied on Monday, fueled by tariff hesitations and strong services sector data. However, manufacturing weakness and tariff uncertainties continue to weigh on investor sentiment.

  • As the Fed signals a cautious rate-cut outlook, the consumer confidence report on Tuesday will be closely monitored by investors.
  • Financial markets remain volatile, with tariff policies, economic data, and Fed guidance driving sentiment.

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