3/5/25 Market Report
Wednesday, March 5, 2025
To listen to this report read by Jason Kelly, please click here.
Today’s rally on Wall Street showcased a spirited rebound, but hardly a triumphant one. Stocks clawed back some of Tuesday’s drubbing, when three of the four major indexes tumbled more than 1%, and the S&P 500 wiped out every inch of post-election progress. Today’s partial recovery could be characterized as a 1% flicker:
Level Change 3/5/25 (%)
– – – – – – – – – – – – – – –
+1.1 Dow
+1.5 Nasdaq
+1.4 Nasdaq 100
+1.1 S&P 500
+1.2 S&P 400
+1.0 S&P 600
Leading the charge? Megatech, with most of the usual suspects in the green, except for Apple, which lagged like a marathoner with a rock in its shoe. The dollar index took a 1.4% spill, its worst session since November, adding to concerns that America’s economic upheaval could cost its reserve currency status. WTI crude slid 2.9% to its lowest close since September — helpful for inflation and geopolitical tension, but an ominous signal for demand.
The day’s bounce found footing in the White House’s on again, off again rhythm on tariffs. Yesterday’s hard line became today’s conciliation, as Canada and Mexico received month-long exemptions from auto levies. That, coupled with a sturdier-than-expected ISM services report, helped cool some recession paranoia. The morning’s ADP payrolls miss (77K vs. 150K expected) was shrugged off as the market latched onto whatever good news it could find.
Across the Atlantic, Germany declared a “whatever it takes” moment, teeing up infrastructure and defense spending.
The dominant story remains the looming unknowns of Trump 2.0: policy uncertainty, stagflation risks, and systematic traders still leaning on the supply side. Bank of America wrote in a commentary that its team believes:
“Trumponomics 2.0 has introduced significant uncertainty to the economic landscape, driven by tariff threats, shifting trade negotiations, immigration policies, record fiscal deficits, and geopolitical developments like the Russia-Ukraine peace talks.”
Small wonder the word “uncertainty” appeared five times in the Institute for Supply Management’s survey of the services industry for February. One manager told ISM: “Business seemed to pop after the election, but uncertainty after the election seemed to take the ‘wind out of our sales,’ with uncertainty again increasing.”
The Fed’s Beige Book painted a mixed picture: economic activity eking out gains since mid-January, but consumer spending softening and price sensitivity rising. Businesses remain obsessed with tariffs, many either raising prices or bracing to do so.
— Jason Kelly