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A Zero-Down Day
Stocks meandered lower today with the all the enthusiasm of a General Motors accountant perusing the tariff tally. After yesterday’s notable slides in the S&P and Nasdaq, the indexes couldn’t build a bounce.
Level Change 3/27/25 (%)
– – – – – – – – – – – – – – –
-0.4 Dow
-0.5 Nasdaq
-0.6 Nasdaq 100
-0.3 S&P 500
-0.7 S&P 400
-0.4 S&P 600
Blame went to tariffs again, as investors digested last night’s declaration of 25% levies on imported vehicles and parts, which Trump said will be “permanent.” If trade partners retaliate, he’ll up the ante, but promised the April 2 reciprocal tariff plan will be “lenient.”
UBS ran the numbers and concluded that 2025 profit margins at Ford (F -3.9%) and General Motors (GM -7.4%) may soon be the stuff of memory. J.P. Morgan went further, warning that per-car costs could spike by $5,000. With the average new vehicle set to fetch around $53,000, Americans may finally come to appreciate the charm of that ’09 Camry with low mileage. The averaged used car runs only $26,000. Head to the used-car lot — or open one.
On which, you know who’s really loving auto tariffs? Rental car companies.
Avis (CAR +20.5%) and Hertz (HTZ +22.6%) had their best day since 2021 after investors realized the following: As new-car prices climb faster than a Taylor Swift ticket resale, rental car companies will sit on a gold mine. Their fleets are about to become hot commodities, both as valuable assets on the books and profit centers on the resale market. Hertz might drop the “rent” part entirely: lots packed with pre-tariff, pre-owned, premium prizes they just don’t make anymore.
Other economic tea leaves remain maddeningly mixed. Hard data still flex their muscles, while soft data have been skipping the gym.
Shoppers and boardroom bedwetters are down in the mouth, but the final read on Q4 gross domestic product ticked up to a 2.4% SAAR (seasonally-adjusted annual rate) from a prior 2.3%, helped by an acceleration in consumer spending.
And it’s not just pre-uncertainty relics propping up the optimism. February pending home sales rose 2.0% month-over-month, better than consensus expectations and staging a decent rebound from January’s 4.6% plunge to an all-time low. That’s improvement, but still nothing great. What homebuyers really need is a meaningful reduction in mortgage rates, so they can afford more than the house tour.
After the close, Richmond Fed President Tom Barkin largely echoed Chair Powell’s comments last week: current monetary stance is in a good position and can adjust to shifting conditions, uncertainty might stifle consumer and business spending, rapid change has raised uncertainty, tariffs complicate inflation but to what extent is unclear: “No one knows where the tariff rates will finally settle or how affected countries, businesses, and consumers will respond.”
— Jason Kelly
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