Tariffs may be bad for the stock market but uncertainty is even worse.

President Donald Trump delayed levies on more goods Thursday, pausing tariffs on imports from Mexico and Canada that comply with his 2020 free trade agreement. It's the latest reprieve following a one-month exemption for autos.

But significantly, the stock market reaction was a surprise--it didn't respond well. The S&P 500 declined 1.8% and has now moved more than 1%--in either direction--for six consecutive days, the longest such streak since November 2020. Unfortunately the index is down 3.7% over that period, falling on four of the six days.

At this point, companies, consumers and investors may have tariff fatigue - what they actually want is to know the full extent of Trump's trade policy now. That way they can plan investment, spending and portfolio changes.

Instead, the market is at the mercy of almost daily, sometimes contradictory updates on the White House's tariffs strategy. With a series of deadlines now congregating at the start of April, the prospect of further clarity seems some way off.

The focus will likely shift to the real-world impact, if it hasn't already. Friday's jobs report will be closely watched, while the health of U.S. consumers is set to be a big theme.

Retailers Kohl's, Dollar General and American Eagle all report earnings next week, while the consumer price index will give a key insight into the inflation picture. Costco executives said Thursday they expect shoppers to become more "choiceful" as tariffs lead to higher prices--Target and Best Buy warned of price hikes earlier this week.

The University of Michigan's consumer sentiment index for March could be key when it's released late next week, especially after February's downside surprise began a flurry of disappointing data.

If tariff fatigue has set in then updates on the U.S. economy may dominate markets until more certainty comes along. Let's hope consumers show their resilience.

-- Callum Keown

***

Trump Reverses on Levies for Some Imports, For Now

President Donald Trump delayed tariffs on more imports from Canada and Mexico two days after imposing the duties, turning his attention to reciprocal tariffs on goods from countries that charge import levies on American products, which he plans to announce one month from now.

   -- Treasury Secretary Scott Bessent calls it the "America First Trade 
      Policy." He dismissed concerns that tariffs could worsen inflation, 
      calling them a one-time price adjustment. The U.S. will put economic 
      pressure not just on adversaries, but also allies who don't align with 
      Trump's vision, he said. 
 
   -- Bessent's defense of Trump's global vision indicates that the U.S. will 
      continue to pressure its traditional trading partners, and Trump's new 
      reciprocal tariff policy will look at factors other than just levies 
      other countries impose, Bessent told the Economic Club of New York. 
 
   -- The pause on tariffs for goods from Mexico and Canada will apply to about 
      half of Mexican imports and 37% of Canadian goods that comply with the 
      U.S. Mexico-Canada Agreement, which Trump negotiated during his first 
      term. Canadian energy imports are subject to a 10% tariff, not 25%. 
 
   -- Trump had already given auto makers a pause. The U.S. also lowered a 
      tariff on Canadian potash not covered by the 2020 trade agreement called 
      USMCA to 10% from 25%. Potash is an agricultural fertilizer. Trump said 
      he made the move to protect American auto makers and farmers. 

What's Next: Canada's Finance Minister Dominic LeBlanc said in a social media post that Canada would not go forward with a second wave of tariffs on $125 billion of American imports until April 2, "while we continue to work for the removal of all tariffs."

-- Janet H. Cho and Matt Peterson

***

Bitcoin Falls on Details of Strategic Reserve

Bitcoin fell overnight after President Donald Trump signed an executive order to establish a strategic crypto reserve. The devil's in the details.

   -- The strategic reserve should be bullish for the market but for one key 
      detail -- it seems the government won't be buying any Bitcoin. "The 
      Reserve will be capitalized with Bitcoin owned by the federal government 
      that was forfeited as part of criminal or civil asset forfeiture 
      proceedings. This means it will not cost taxpayers a dime," White House 
      crypto czar David Sacks said in a social media post. 
 
   -- The selloff came after Trump signed an executive order to establish the 
      strategic Bitcoin reserve and a digital-asset stockpile. The President 
      name-checked Ether, XRP, Solana, and Cardano as the cryptocurrencies that 
      will be held in that stockpile in another social medal post. 
 
   -- The reveal that the government won't plow any new funding into Bitcoin 
      appears to have disappointed investors. The cryptocurrency is already on 
      a rough run, having dropped more than 7% over the past month, and it's 
      now trading about 23% below the record price it hit back in January. 
 
   -- The world's largest token dropped as low as $85,000 late Thursday, before 
      paring back some of its losses. It has fallen about 3% over the past 24 
      hours, according to data from the crypto news site CoinDesk. 

What's Next: Digital-asset bulls will be hoping a landmark White House crypto summit can spark a turnaround. Trump, who is seen as crypto-friendly, even launching his own coin earlier this year, is expected to further outline his administration's digital-asset policies at Friday's event.

-- Callum Keown and George Glover

***

Broadcom's Beat Means Maybe the AI Trade Isn't Dead

A strong showing by Broadcom could provide some relief to the beaten-down trade in stocks related to artificial intelligence. The chip maker said record first quarter revenue was driven by AI semiconductor solutions and infrastructure software, giving better than expected guidance for the current quarter.

   -- For its fiscal first quarter ending January, Broadcom reported revenue of 
      $14.92 billion, up 25% from a year earlier, and adjusted earnings of 
      $1.60 a share, both beating expectations. For the current quarter, it 
      sees revenue of $14.9 billion. 
 
   -- For the first quarter, AI revenue was up 77% from a year earlier, to $4.1 
      billion, and infrastructure software revenue rose 47% to $6.7 billion. 
      CEO Hock Tan said they expect continued strength in the second quarter, 
      projecting AI semiconductor revenue of $4.4 billion. 
 
   -- Hyperscaler partners continue to invest in AI accelerators and 
      connectivity solutions for AI data centers, Tan said. Broadcom's largest 
      three technology customers are each racing toward building a one million 
      AI chip cluster by the end of 2027. 
 
   -- Broadcom's semiconductors are in a number of categories, including 
      networking, broadband, server storage, wireless, and industrial. Some of 
      the company's chips can be used for generative-AI applications. 

What's Next: Tech stock investors have been worrying amid the uncertainty of the Trump administration's trade policies and their potential to affect the chip sector. The Nasdaq has dipped into correction territory, closing Thursday more than 10% off its Dec. 16 record.

-- Tae Kim and Liz Moyer

***

Retailers Costco and Gap Comment on Potential Tariff Impacts

Costco is warning about cautious customers because of higher prices and the potential effect of tariffs as the warehouse retailer reported mixed second quarter results. Executives used the term "choiceful" to describe what they expect from shoppers as tariffs raise prices.

   -- The remarks echo comments earlier this week by Target CEO Brian Cornell. 
      But Costco may have an advantage over competitors when it comes to 
      navigating a more inflationary environment: Membership fees account for a 
      good chunk of its operating profits. 
 
   -- Costco reported earnings of $4.02 a share for the February quarter and 
      revenue of $63.7 billion. Same store sales rose 6.8%, topping 
      expectations. CEO Ron Vachris said it is difficult to predict how tariffs 
      will affect business. 
 
   -- About a third of Costco's sales in the U.S. are imported, and less than 
      half of those are items coming from China, Mexico, and Canada, he added. 
      The Trump administration has paused some of the tariffs from Mexico and 
      Canada until April. 
 
   -- Another retailer, Gap, surpassed expectations amid a "reinvigoration" of 
      its brands. Its sales forecast for the year beat expectations despite the 
      possible effect of tariffs. Its Old Navy, Banana Republic and Gap brands 
      all reported quarterly same-store sales increases. 

What's Next: Gap CFO Katrina O'Connell told analysts it gets less than 10% of its product from China, and less than 1% from Canada and Mexico combined. Its 2025 outlook is based on what it knows today about tariff policy and includes any expected impact to margins.

-- Sabrina Escobar and Liz Moyer

***

Falling Mortgage Rates Could Attract More Potential Home Buyers

The 30-year fixed-rate mortgage rate fell to an average of 6.63% this week, Freddie Mac said, in the biggest one-week drop since mid-September and the lowest rate since mid-December. That could help usher in buyers as the typically busy spring homebuying season begins.

   -- Lower rates increase prospective home buyers' purchasing power and offer 
      a strong incentive to make a move, Freddie Mac chief economist Sam Khater 
      said. The share of mortgage applications from homeowners hoping to 
      refinance rose to nearly 44%, the highest since mid-December. 
 
   -- Pending home sales measured by Redfin brokerage in the four weeks ending 
      March 2 dropped 6.4% from one year prior. But mortgage applications 
      increased a seasonally adjusted 9% from the prior week, and were 2% 
      higher than in 2024. 
 
   -- On a mortgage for a median-priced $400,000 home with a 10% down payment, 
      a drop in rates of even half a percentage point, from 7% to 6.5%, saves 
      the buyer about $120 a month, said Lisa Sturtevant, chief economist at 
      Bright MLS. 
 
   -- About 17.2% of U.S. homeowners have mortgage interest rates of 6% or more, 
      according to a Redfin analysis of federal government data. About 83% of 
      homeowners have a mortgage rate below 6%, while 21% have a rate under 3%. 

What's Next: While the inventory of homes is growing, the Trump administration's immigration crackdowns and tariff-related building costs have rattled industry confidence, the National Association of Home Builders said. A dynamic of uncertainty affects how people think about the future, BTIG analyst Carl Reichardt said.

-- Shaina Mishkin and Janet H. Cho

***

Do you remember this week's news? Take our quiz below to test your knowledge. Tell us how you did in an email to thebarronsdaily@barrons.com.

1. Earlier this week, President Donald Trump appeared to throw support behind the creation of a crypto strategic reserve. Which of the following did he say would be in it in addition to Bitcoin and Ethereum?

a. XRP b. SOL c. ADA d. All of the above

2. Taiwan Semiconductor Manufacturing is the latest tech company to pledge spending billions of dollars on projects in the U.S. to boost domestic production. How much did it pledge?

a. $50 billion b. $75 billion c. $100 billion d. $125 billion

3. The Trump administration is delaying tariffs on a variety of products after imposing 25% levies on imports from Mexico and Canada. With the tariffs in place, Moody's estimates this amount of trade is at risk in an escalating trade war.

a. $2 trillion b. $3 trillion c. $4 trillion d. $5 trillion

4. Novo Nordisk has a plan to sell its popular weight loss drug Wegovy through its in-house pharmacy to consumers who either aren't insured or whose insurance won't pay for the cost. How much does it plan to charge?

a. $499 a month b. $499 a year c. $599 a month d. $599 a year

5. The 30-year fixed-rate mortgage fell to an average of 6.63% on March 6, the lowest level in three months and the biggest one-week drop since when?

a. Mid-September b. Mid-October c. Mid-November d. Mid-December

Answers: 1( d ); 2( c ); 3( b); 4( a ); 5( a )

-- Barron's staff

***

-- Newsletter edited by Liz Moyer, Brian Swint, and Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 07, 2025 06:46 ET (11:46 GMT)

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