The seasons are changing, and so is the stock market.

It took a sharp turn south on Thursday after President Donald Trump said 25% tariffs on imports from Mexico and China would take effect next week and the import tax on Chinese goods would go up more. The S&P 500 promptly gave up its gains for the year.

The next marker is stocks' gains since Trump won the election. There's not far to go--the S&P is now only 1.4% higher since Nov. 5.

But hang on. How is this different from last time? Stocks briefly took a dive on tariff threats a month ago but quickly recovered when Trump delayed their implementation--though February still ended up being a bad month for stocks. If the president is keeping an eye on markets, he will have noticed the hit to car makers has been especially stark. Ford and General Motors are each down more than 10% since voting day.

It's definitely a bad sign that tariffs are still headline news. On top of that, the artificial intelligence trade that has done so much to boost stocks over the past two years looks like it might be running out of steam. Nvidia, the maker of semiconductors that power AI models, beat Wall Street expectations on earnings but the stock still plunged 8.5% Thursday. Big Tech looks tired-- Apple is the only company that still boasts a value higher than $3 trillion. The jump in jobless claims reported yesterday doesn't help confidence in the economy.

There are bigger questions underneath all this. Is the market peaking? Has American exceptionalism--the idea that U.S. stocks will do well regardless of what happens elsewhere--run its course? The recent gains in Chinese and European shares point in that direction.

The market may still turn up again as we move into a fresh month and springtime blooms, but for now, it feels like the vibe is shifting.

-- Brian Swint

***

U.S. Auto Industry Braces for Trade-War Fallout

After blustering about them for weeks, President Donald Trump said his 25% tariffs on Canada and Mexico imports take effect on Tuesday, and he has doubled additional tariffs for Chinese goods. One immediate fallout will be the U.S. auto industry after three decades of operating in North America's free-trade zone.

   -- Canada and Mexico plants assemble millions of cars and supply a 
      significant number of auto parts. Trump claims without evidence that 
      fentanyl is pouring into the U.S. from the two countries. The White House 
      says Trump wants to see progress on fentanyl-related imports before 
      agreeing to back off the levies. 
 
   -- Trump rejected criticism that his tariffs would hurt the Michigan auto 
      industry, saying they will drive auto manufacturing to Michigan instead. 
      Ford CEO Jim Farley has said tariffs could wipe out billions in 
      auto-industry profit, hurt American jobs, and raise car prices. 
 
   -- Trump earlier this month proposed tariffs on Canada, Mexico, and China, 
      citing drugs and migration, but postponed the Canada and Mexico levies 
      for a month after their leaders promised to reinforce their borders. His 
      earlier 10% tariffs on China went into effect, and he is adding another 
      10%. 
 
   -- Questions about when the tariffs would begin -- and about any retaliation 
      -- are contributing to unprecedented levels of uncertainty. The 30-day 
      moving average for the Economic Policy Uncertainty Index hit 334 on 
      Wednesday, the highest level on record since 1985 not counting the 
      pandemic, when it rose above 500. 

What's Next: Tariffs are also weighing on bond yields, Morgan Stanley told Barron's. Strategist Matthew Hornbach said 10-year yields could fall to 4.09% if expectations for the low point for the federal-funds rate drop to 3.4%. Current expectations are for a low of 3.65%.

-- Joe Light, Karishma Vanjani, and Janet H. Cho

***

Dell and HP Inc. Deliver Mixed Reports and Outlooks

Dell Technologies reported a mixed revenue outlook for the current quarter despite saying its prospects for artificial intelligence are strong. Its revenue forecast for the current quarter is slightly below expectations, but it could make up for that if it meets the top end of the range in projected 2026 revenue.

   -- Dell's COO Jeff Clarke said they are extending AI "from the largest cloud 
      service providers, into the enterprise at-scale, and out to the edge with 
      the PC." Fourth quarter revenue rose 7% to $23.9 billion, short of 
      expectations, while earnings of $2.68 a share beat projections. 
 
   -- For the current quarter, Dell forecast a revenue range of $22.5 billion 
      to $23.5 billion. For the full year 2026 it expects a revenue range of 
      $101 billion to $105 billion, versus the $103.4 billion consensus. 
 
   -- HP Inc. also reported mixed results as adjusted earnings of 74 cents a 
      share fell 9% and revenue rose 2% to $13.50 billion, above expectations. 
      Leading the revenue beat were PC sales, up 5% on the year, versus analyst 
      projections of a 3% rise, but profit margins narrowed. 
 
   -- HP's outlook for adjusted EPS in the second quarter is 80 cents, which is 
      below expectations, but its 2025 estimate for EPS of $3.60 is above 
      estimates, suggesting better performance in the second half of the fiscal 
      year. 

What's Next: HP also hinted the current trade environment is weighing on profitability this year. It said its outlook reflects the added cost driven by the current tariff increases on China, "and associated mitigations."

-- Tae Kim and Adam Levine

***

Fidelity Notes a Rise in Retirement Account Millionaires

Last year's booming stock market helped vault more than 130,000 Americans into millionaire status, as reflected in the balances in their defined contribution retirement plans. It's a snapshot of how well prepared Americans are for retirement amid fears Social Security could fall under Congress' cost cutting ax.

   -- Fidelity Investments, the fund giant that tracks the data, said the 
      number of 401(k) millionaires rose 27%, to 537,000 at the end of 2024. 
      The number of millionaire individual retirement accounts rose 8% to 
      344,000. Still, the average balance of a 401(k) was $131,700. 
 
   -- Retirement investors benefited from the S&P 500 rising 24% last year, and 
      the Nasdaq Composite rising 30%. Currently, markets are weighed down by 
      concerns over inflation, tariffs, food prices, and the economy. The 
      Nasdaq has dropped 5.5% this month. 
 
   -- President Donald Trump and Elon Musk, the public face of the Department 
      of Government Efficiency, claim massive fraud within Social Security, 
      including payments to dead people. But the agency's Inspector General's 
      Office found that less than 1% of payments from 2015 to 2022 were 
      improper. 
 
   -- DOGE wants to find at least $1 trillion in savings across the federal 
      government's annual budget, which is estimated at $7 trillion for 2025. 
      Of that, Social Security represents about 22%, or an estimated $1.6 
      trillion. Some fear Musk is weakening Social Security's foundations. 

What's Next: Social Security benefits aren't on the table during the ongoing budget negotiations. But if the public believes their tax dollars are funding improper payments and support for Social Security wanes, Congress could have an easier job taking a swing at benefits.

-- Andrew Welsch, Elizabeth O'Brien, and Janet H. Cho

***

Chicken and Egg Producers Squabble Over Flock Vaccination

The producers of chicken meat are squabbling with the ones who sell eggs about whether to vaccinate poultry flocks to stop the spread of bird flu. More than 166.2 million chickens, turkeys, and other birds have been slaughtered since the outbreak began in 2022, according to the Centers for Disease Control and Prevention.

   -- The broiler industry, representing the chicken-as-meat side of the 
      argument, says that vaccinating the birds would make American poultry 
      products less desirable for export to other countries. They exported $4.7 
      billion last year, according to a report from the USA Poultry & Egg 
      Export Council. 
 
   -- Egg producers, on the other side, want so-called biosecurity measures. 
      While the Agriculture Department granted a conditional license to Zoetis 
      for its bird-flu vaccine for chickens, it hasn't been approved and isn't 
      available. And regulators are reviewing a contract for a human bird flu 
      vaccine awarded to Moderna, Bloomberg reported. 
 
   -- Agriculture Secretary Brooke Rollins announced $1 billion to combat bird 
      flu, including $500 million for biosecurity measures, $400 million for 
      farmers' financial relief, and $100 million for vaccine research. So far, 
      976 dairy herds in 17 states have been affected, dozens of people have 
      been infected, and one person has died. 
 
   -- The USDA expects retail egg prices to jump 41% this year, more than 
      double an earlier forecast. Denny's and Waffle House restaurant chains 
      are charging extra for egg dishes, but McDonald's has vowed not to. 
      Cal-Maine Foods, the largest U.S. egg producer, is adding capacity for 
      layer hens by late summer 2025. 

What's Next: The family of Cal-Maine founder Fred Adams Jr. wants to change their super voting shares to regular stock, reducing their voting power to 12% from 53.2%, and the company is revamping its board. Those actions, and a plan to buy back $500 million shares, could broaden investor appeal.

-- 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. Warren Buffett's Berkshire Hathaway got a boost in the fourth quarter from strong results from its insurance operations and interest income on its record-high pile of cash, which reached how much by the end of last year?

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February 28, 2025 06:42 ET (11:42 GMT)

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