By Alex Financials

U.S. Stock Market Rebounds After Trump’s Tariff Concessions

Dow Surges Nearly 500 Points Amid Trade Optimism

On March 5, 2025, the U.S. stock market experienced a significant rebound after President Donald Trump announced a one-month exemption on auto tariffs for Canada and Mexico. The Dow Jones Industrial Average ($DJI) surged nearly 500 points, marking a 1.2% increase, while the S&P 500 ($GSPC) climbed 1.1%, and the tech-heavy Nasdaq Composite ($IXIC) outperformed with a gain exceeding 1%.

The rally followed two consecutive days of steep declines, during which the Dow had plummeted 670 points on March 4, and the S&P 500 and Nasdaq approached four-month lows. The earlier sell-off was triggered by Trump’s imposition of a 25% blanket tariff on imports from Canada and Mexico, which raised concerns about escalating trade tensions and their economic impact.

Auto Stocks Lead the Charge

Shares of major U.S. automakers soared following the tariff reprieve. Ford ($F), General Motors ($GM), and Stellantis ($STLA) each saw gains of at least 5% as investors welcomed the temporary relief from tariffs that could have significantly impacted their operations.

Commerce Secretary Hints at Further Negotiations

Earlier in the week, Commerce Secretary Howard Lutnick indicated on “Fox Business” that the U.S. might find common ground with Canada and Mexico to adjust tariffs. This hint at potential negotiations helped stabilize market sentiment, even as Canada, Mexico, and China prepared countermeasures against U.S. tariffs.

Labor Market Weakness Adds to Economic Concerns

Despite the market rally, new labor market data highlighted potential economic vulnerabilities. The ADP reported that private businesses added only 77,000 jobs in February, a sharp decline from January’s figures and well below economists’ expectations. This data has heightened anticipation for Friday’s non-farm payrolls report, which will provide further insights into the health of the U.S. labor market.

Global Markets React to Trade Developments

The ripple effects of U.S. trade policies were felt globally. The German DAX ($DAX) fell 3.5% on March 4, reflecting investor unease over the potential for a broader trade war. Meanwhile, India’s NIFTY 50 ($NIFTY) and SENSEX ($SENSEX) also experienced declines, with the NIFTY 50 dropping 1.86% and the SENSEX falling 1.90%.

Conclusion: A Fragile Recovery

While the stock market’s rebound on March 5 provided a welcome respite for investors, the underlying economic concerns remain. The temporary tariff exemption offers a glimmer of hope for trade negotiations, but the labor market’s weakness and ongoing trade tensions suggest that volatility may persist in the weeks ahead. Investors will closely monitor developments in trade talks and upcoming economic data to gauge the market’s trajectory.