Economic Data and Market Highlights
During the week ending March 28, 2025, the global economy and securities markets experienced significant volatility, primarily influenced by the US announced a 25% tariff on all imported automobiles, the Personal Consumption Expenditures (PCE) index reporting a higher-than-expected increase, and the University of Michigan’s Consumer Sentiment Index falling to its lowest level since late 2022. The news contributed to major stock indices declining sharply. The S&P 500 dropped 2%, the Dow Jones Industrial Average fell 1.7%, and the Nasdaq Composite decreased by 2.7%. Broadly, asset classes were mostly correlated with the exception of gold. Gold prices reached a record high of $3,124 per ounce, as investors sought safe-haven assets amid market uncertainty. The Bloomberg US Aggregate Bond Index fell 71 basis points.
Tariffs on cars can significantly impact prices, production, and jobs in the auto industry as the proposed 25% tariff is estimated to increase new car prices by $2,000 to $7,000. GM’s and Ford’s stock fell 7.4% and 3.9% respectively. Tesla and Rivian got a bit of a boost due to their domestic operations. Perhaps the biggest surprise were the increases rental car companies. Hertz and Avis shares rose, with shares jumping over 20% each.
Some brands and models will feel it more than others. German brands like BMW, Mercedes-Benz, and Audi rely heavily on imports such as the 3 Series, C-Class, and A4. Japanese brands, Toyota, Honda, Mazda, and Subaru have U.S. plants, but still import higher-end models such as the Land Cruiser, Acura NSX, and Mazda CX-5. Korean brands like Hyundai, Kia, and Genesis are ramping up U.S. production, but imports like the Genesis G80 or GV70 have exposure. Volvo manufactures most vehicles in Europe and China. Fully imported luxury brands like Porsche, Ferrari, Jaguar, and Maserati will likely be hit the hardest.
Jim Bianco Research recently published a graphic related to the Uncertainty Index. It’s based off of articles related to economic uncertainty in the 10 largest US newspapers and recently reached its highest point in 40 years. With all caveats related to past performance not being a guarantee of future returns, we looked at how the market (the S&P 500 and MSCI EAFE) performed one year following these data points and posted the returns below the graphic.
The Past Week’s Notable US data points (with revisions)
The Upcoming Week’s notable US data points
Source: Morningstar
Data Source: Blackrock, Bloomberg, Charles Schwab, CNBC, Goldman Sachs, J.P. Morgan, Jim Bianco Research, Morningstar, MarketWatch, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director
Michael McNamara, Analyst