A sense of calm has returned to the stock market, at least relative to the volatility of President Donald Trump's second term so far.

Wall Street's fear gauge -- the CBOE Volatility Index (VIX) -- fell to its lowest level in more than a month while the S&P 500 moved back above its 200-day moving average Monday for the first time since March 7.

But is the abrupt return to tranquility warranted?

It seems the tariffs imposed on Trump's so-called Liberation Day next week won't be as severe as feared. "I may give a lot of countries breaks, " Trump said, referring to plans for reciprocal tariffs. It comes after he said sector-specific levies on autos, semiconductors, and pharmaceuticals may not take effect until later.

That understandably justifies a degree of relief among investors, but we've been here before and tariff uncertainty hasn't gone away -- far from it.

On the upside, economic data, though, appear to be more encouraging -- particularly as growth fears have spooked the market recently. The U.S. composite purchasing managers' index, a survey of manufacturing and services activity, rose in March after falling in the previous two months. But within that, manufacturing activity dropped below 50, pointing to a contraction, and input price inflation accelerated sharply, according to the survey.

Even with good news right now, there always seems to be a catch. Investors are well aware of the risks yet it didn't take much for the stock market to rally Monday.

In a way that's a good sign -- if much-needed clarity on Trump's policies materializes and/or the economy shows resilience it suggests a sharp rebound could be on the table.

But there's too much uncertainty right now to see this as anything other than the calm before another storm.

-- Callum Keown

***

U.S. Levies May Be Lighter Than Initially Feared

The White House for a month has touted April 2 as a sort of D-Day for a U.S. push back against other countries' tariffs. President Donald Trump has called it "Liberation Day" against countries that export far more to the U.S. than they import from it. But the administration has tamped down expectations.

   -- Trump said he might exempt some nations, and reciprocal tariffs may be 
      softened. Speaking in the Oval Office, Trump said some tariffs could stop 
      short of a threat to equalize what the U.S. charges versus what other 
      countries charge. Levies on imported autos, lumber, and pharmaceuticals 
      may come later. 
 
   -- The U.S. would impose a 25% tariff on imports from any country that buys 
      oil or gas from Venezuela. That comes on top of existing duties, so 
      tariffs on imports from China would amount to 45%. The White House 
      released an executive order saying those tariffs will take effect "on or 
      after" April 2. 
 
   -- The Treasury Department extended Chevron's license in Venezuela through 
      late May after ordering it to end operations there in 30 days. Chevron 
      had pushed for an extension, and the tariff and its license were recently 
      discussed during a White House meeting including CEO Mike Wirth, The Wall 
      Street Journal reported. 
 
   -- Tariffs could hit the 15% of countries that have the biggest trade 
      surpluses with the U.S. the hardest, what Treasury Secretary Scott 
      Bessent has called the "dirty 15." Reciprocal tariffs might also be less 
      long-lasting than sector levies because they are seen as tools to gain 
      negotiating leverage. 

What's Next: Even without the sector levies, the U.S. could impose more than $142 billion in tariffs in the next year, including $47 billion in reciprocal tariffs and more than $87 billion in tariffs on China, Mexico, and Canada in response to the border crisis and illegal fentanyl imports.

-- Joe Light and Liz Moyer

***

Tesla Stock Bounces Back Amid Autonomous Driving Hope

Tesla's beaten down stock jumped nearly 12% on Monday after word that tariffs probably won't be as bad as feared, but there was also news about the electric vehicle maker's autonomous driving systems. CEO Elon Musk has assured employees that gains in self-driving technology and robotics ensure a bright future.

   -- Tesla is preparing to offer its highest-level driver-assistance product, 
      Full Self-Driving, in China, Reuters reported, citing local social-media 
      posts from Tesla employees. Better driver-assistance products can help 
      Tesla sell more vehicles, though it charges for them while rival BYD 
      basically gives it away. 
 
   -- BYD reported higher quarterly automotive revenue than Tesla for the first 
      time and total sales exceeded Tesla's for the second consecutive quarter. 
      BYD, which makes both all-electric and plug-in hybrid cars, shipped 1.5 
      million passenger vehicles in the fourth quarter, including 595,000 
      all-electric models. 
 
   -- Tesla, which sells only all-electric vehicles, delivered 496,000 cars in 
      the fourth quarter. The willingness of Chinese consumers to pay for FSD, 
      and its impact on Tesla's Chinese market share, will be closely watched 
      by investors. 
 
   -- At home, Tesla showrooms have faced protests, including some incidents 
      that resulted in property damage. The FBI has announced the creation of a 
      task force to look into the incidents, calling them "domestic terrorism." 

What's Next: The European Automobile Manufacturers' Association released monthly sales data Tuesday which showed new car registrations for Tesla models fell 47% in February. Tesla will report first-quarter sales on April 2. Wall Street is looking for first-quarter sales of 414,000 vehicles, according to FactSet.

-- Al Root, George Glover, and Janet H. Cho

***

Novo Nordisk Will License Potential Chinese Weight-Loss Rival

Danish pharmaceutical giant Novo Nordisk has agreed to license a Chinese company's potential rival to its blockbuster diabetes drug Ozempic and weight loss drug Wegovy. The agreement will give Novo Nordisk exclusive rights to develop, manufacture, and commercialize the drug outside of China and other regions.

   -- Novo Nordisk will pay $200 million upfront and up to $1.8 billion in 
      milestone payments to United Laboratories International for the rights to 
      the drug, which is in early-stage clinical development for the treatment 
      of Type 2 diabetes, obesity, and other diseases. 
 
   -- Novo Nordisk is currently a U.S. leader in so-called GLP-1 drugs. The 
      United Biotechnology drug is what's known as a "triple agonist" that 
      binds to three receptors. Eli Lilly, one of Novo's closest rivals, is at 
      work developing its own triple agonist called retatrutide. 
 
   -- United Biotechnology, a wholly-owned subsidiary of United Laboratories 
      International, will retain the rights for the drug in mainland China, 
      Hong Kong, Macau, and Taiwan. Novo Nordisk will be granted exclusive 
      rights everywhere else. 
 
   -- Novo Nordisk is also at work developing newer weight loss drugs though 
      recent results for a two drug combination called CagriSema fell short of 
      expectations. CagriSema patients reported a 22.7% weight-loss after a 
      year, comparable to Eli Lilly's Zepbound. 

What's Next: Eli Lilly said it would release late-stage trial data for its experimental triple agonist drug later this year, a few months ahead of schedule.

-- Mackenzie Tatananni and Janet H. Cho

***

United Airlines Hikes Card and Lounge Fees

United has become the latest airline to tweak its business model. The Chicago-based carrier added a bunch of perks to its rewards credit cards -- but it means consumers will have to pay more annually.

   -- United and JPMorgan Chase said they were adding new benefits including 
      rideshare credits, car rental, and hotel awards to their co-branded 
      credit cards. The changes mean prices will rise -- for example, the 
      United Club card will now cost $695, up from $525. 
 
   -- The price of lounge memberships will rise for those who don't have the 
      club card, The Wall Street Journal reported. United did not respond to a 
      request for comment Monday. 
 
   -- With fears mounting that consumers will cut back on travel spending, 
      carriers are looking at alternative ways to boost revenue. Southwest 
      Airlines said earlier this month that it plans to start charging for 
      checked bags, bringing an end to its 'bags fly free' policy after 54 
      years. 
 
   -- United's changes appeared to impress investors. Its shares climbed 7.2% 
      Monday, although some of those gains could have been part of a broader 
      rally fueled by reports that President Donald Trump's tariffs on April 2 
      may not be as severe as expected. 

What's Next: The measures could give United's top line a small boost -- the carrier generated about 6% of its total sales from "other" operating revenue last year. This comes amid several recent warnings from the largest U.S. airlines suggesting consumer and corporate demand is softening.

-- Callum Keown and George Glover

***

Proposed Medicaid and Nutrition Aid Cuts Could Devastate States: Report

Republican lawmakers have advanced a budget that calls for billions of dollars in cuts to Medicaid and food benefits over the next decade as they try to extend President Donald Trump's 2017 tax cuts. A new report said those cuts would slash state tax revenue and cause steep job losses.

   -- The budget seeks $880 billion in Medicaid cuts and $230 billion in cuts 
      to the supplemental nutrition program. That would result in a projected 
      loss of one million jobs and $8.8 billion in state and local tax revenue 
      in 2026, Commonwealth Fund and George Washington University found. 
 
   -- Proposed cuts to Medicaid would lead to the elimination in 2026 of 
      477,000 healthcare jobs across all 50 states, with California, New York, 
      Texas, Pennsylvania, and Florida the hardest hit, the report projects. 
      Hospitals, nursing homes and doctors' offices would cut staff in response 
      to reduced Medicaid revenue. 
 
   -- Another 411,000 jobs would be shed as losses ripple throughout the state 
      economies, cutting state and local tax revenue by $7 billion, the report 
      found. Proposed food assistance cuts would eliminate 143,000 jobs 
      nationwide, including 78,000 jobs in food-related sectors, and cut tax 
      revenue $1.8 billion. 
 
   -- The programs aren't just for individuals, "they support the economic 
      well-being of communities and businesses nationwide," said Leighton Ku, 
      lead author and director of the Center for Health Policy Research and 
      professor of health policy and management at GW's Milken Institute School 
      of Public Health. 

What's Next: Lawmakers also have to address the nation's debt ceiling. The Bipartisan Policy Center projects that the federal government will reach that point as early as mid-July if Congress doesn't raise it. Although unlikely, that limit could be reached in June if tax revenue falls short of projections, the group said.

-- Elizabeth O'Brien and Liz Moyer

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, 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 25, 2025 06:56 ET (10:56 GMT)

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