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Transitory, Eh?
Stocks returned to their losing ways today, weighed down by a fresh round of tech-stock deterioration and tariff twitchiness, confirmed this evening when President Trump announced 25% levies on cars and parts shipped into the United States, effective April 2.
Level Change 3/26/25 (%)
– – – – – – – – – – – – – – –
-0.3 Dow
-2.0 Nasdaq
-1.8 Nasdaq 100
-1.1 S&P 500
-0.6 S&P 400
-0.5 S&P 600
The page-turner remained trade — or rather, the prospect of less of it. Along with auto tariffs, another weight arrived on cue: an expanded US blacklist of Chinese tech firms. Weekend hopes of a narrower, more surgical tariff strategy have given way to blunter instruments. Trump 2.0 policy overhang remains a market preoccupation.
Capital Economics offered a nuanced review of the new auto tariffs, writing in a research note: “In the long run, this could boost domestic investment and production. In the short run, however, it will be inflationary and, assuming that domestic producers respond by substantially increasing their own prices, could make new vehicles something of a luxury item.”
Elsewhere in the economy, durable goods orders staged a surprise advance, perhaps to distract from the core capital goods orders that shrank unexpectedly. Core shipments were better.
Minneapolis Fed President Neel Kashkari flagged uncertainty around tariffs and reiterated data dependency by calling for a hold on interest rates until more is known. He said the Fed should “just sit where we are for an extended period of time until we get clarity.” He alluded to the soft vs. hard data divide in a discussion about falling sentiment: “The good news is, that hit to confidence could be restored quickly if there are resolutions of these trade uncertainties.” That’s an “if” the size of a Ford F-250’s tariff tab.
St. Louis Fed President Alberto Musalem pushed back against the Fed’s rediscovered love for the word “transitory,” a 2021 inflation term that aged like unrefrigerated milk and is now being used to describe tariff-driven inflation. He warned of high prices lingering and secondary ripple effects, and now sees inflation reaching the central bank’s 2% target in 2027, later than what he forecast in December.
Tech, that most glamorous of sectors, had its makeup smudged.
Microsoft (MSFT -1.3%) reportedly scrapped data center projects, raising fears of a broader AI spending slowdown. Nvidia (NVDA -5.7%) sank after the Financial Times reported it might lose $17B of annual revenue in China over new energy rules that frown on its popular Hopper chips.
And in a rare bright spot, Dollar Tree (DLTR +3.1%) proved it knows a thing or two about tariffs. With the grace of a ballerina on a budget, the company has managed to offset over 90% of tariff costs. How? Supplier concessions, new specs, alternate sourcing — all the unsexy but essential things that remind us retail’s true power is not flash, but grind.
— Jason Kelly
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