In Markets "In a Nutshell"

Markets “In a Nutshell” for March 31, 2025

Investment Week at a Glance

Stocks finished lower for the week. The Dow Jones Industrial Average fell 1.0%, the S&P 500 was down 1.5%, and the NASDAQ fell 2.6%. Foreign stocks (MSCI EAFE) were also down, falling 0.6%. Bond prices were flat for the week, with the 10-year U.S. Treasury ending the week at 4.25%.  (Data source: Wall Street Journal)

25% Auto Tariffs Announced

Tariffs have been the focus of the market recently and have caused uncertainty for investors. Most recently, President Trump signed an executive order placing tariffs on auto imports into the U.S. This is set to take effect April 3rd on fully assembled vehicles and will expand to include auto parts by May 3rd. This announcement put pressure on the automakers and part suppliers. This also put pressure on the markets of Germany and South Korea which have large exposure to the automakers. It is uncertain if these tariffs will be permanent as President Trump said they are able to be negotiated but if they remain foreign automakers will likely begin producing in the United States, but it will be a multi-year process. In the short-term car prices will likely increase and the industry as a whole will face disruptions.

Current Economic Conditions

Although headlines have been negative regarding the market and economy, all is not doom and gloom. The S&P 500 is down less than 5% for the year and is positive when looking back 12 months. Corporate profits continue to rise and are expected to see double-digit growth in 2025, this typically does not happen before a recession. Unemployment remains low and the private sector continues to grow and add jobs. Government layoffs will likely have some downward pressure, but the Federal government employs less than 2% of the workforce. The Fed is expected to make 2 rate cuts throughout the year which will help the economy as lending costs will likely decrease. The Trump economic policy is likely to shift to pro-growth with tax-cuts and deregulation part of the economic plan.

Lululemon Stock Falls 15%

Lululemon reported earnings last week and beat expectations on both earnings and revenue, yet its stock fell 15%. This was due to disappointing guidance for the company as the CEO said inflation and economic concerns are weighing on spending. CEO Calvin McDonald also said that they do not expect tariffs to affect their business much despite being a Canadian-based company. He also stated that sales in the U.S. have been flattening but internationally they have seen a 20% increase. (CNBC)

Quiz:

What country does the U.S. import the most cars/parts from? (Scroll Down for Answer)

  1.     Mexico
  2.     Canada
  3.     Germany
  4.     Japan

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

Answer:

1.   Mexico.  32% of auto imports for the U.S. come from Mexico. The next largest is Japan at 16%. Auto tariffs will likely have the biggest impact for these countries economics as they are reliant on importing to the U.S.

 

 

 

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