The stock market jumped to start the week, but hit resistance. The major indexes made a bullish move Monday that had qualities of a follow-through day, in large part on hopes for less-severe Trump tariffs. But President Donald Trump's auto tariffs news slammed the S&P 500 and Nasdaq on Wednesday. Hot inflation readings also took a toll, with the major indexes all back below their 200-day lines on Friday.
General Motors plunged on the auto tariffs, but relatively unscathed Tesla rebounded. Tesla rival BYD reported strong earnings and revenue growth and unveiled several new EVs. Nvidia tumbled on China's restrictions on its chips and fresh signs of cooling AI hardware demand.
Stock Market Jumps, Slumps
The stock market jumped Monday on hopes that Trump tariffs would be less severe, but then fell back as the president announced auto tariffs. The major indexes clung to modest gains for the week. The Dow Jones and S&P 500 moved above their 200-day lines on Monday, but the S&P fell back. Many growth stocks ran up early in the week but then pared or erased gains. Treasury yields rose, but slashed weekly gains Friday.
Stagflation Data Picking Up
The Fed's primary inflation rate, the core PCE price index, ticked up to 2.8% in February as consumer spending bounced a bit less than expected after falling in January. If consumers are right, there could be more of the same in store. The University of Michigan's consumer sentiment index fell to 57 in March, its lowest level since November 2022, when the Fed was aggressively hiking to stem inflation. Consumers now expect 4.1% long-run inflation, a 32-year high, and two-thirds of them expect higher unemployment this year, the most since 2009. The inflation, spending and consumer sentiment reports on Friday sent Treasury yields lower, with the 10-year yield diving 10 basis points. That's a sign that weak growth may tilt the Fed to rate cuts, despite tariff-related inflation. Meanwhile, depressed business confidence may be taking a toll on capital spending. Nondefense capital goods orders ex-aircraft, a proxy for business investment, fell 0.3% in February, below forecasts for a 0.2% gain.
China Nixes Nvidia Chip
Chinese regulators reportedly have told domestic internet firms Alibaba, ByteDance and Tencent not to order the Nvidia H20 AI chip because it fails to meet new standards for energy efficiency. Nvidia is seeking talks with China's NDRC and is considering technical changes to its bespoke processor to meet the rules, Financial Times said. Meanwhile, AI hardware stocks are being pressured by concerns that the data center build out has overheated. Alibaba Chairman Joe Tsai suggested that the AI data center market is in a bubble. And Microsoft has been canceling planned data center leases and deferring other projects in the U.S. and Europe, TD Cowen said.
CoreWeave, an Nvidia-backed cloud-computing startup, priced its long-awaited IPO Thursday night at $40 a share, well below the official $47-$55 price range, selling a downsized 37.5 million shares. It's the latest bad sign for investor demand for AI infrastructure stocks.
Auto Tariffs Slam GM, Most Peers
President Trump's 25% auto tariffs could cause significant disruptions for the auto industry, with prices expected to rise as much as $10,000. General Motors sold off on the news, with Chrysler parent Stellantis, Volkswagen, Toyota, Honda Motor also down. Ford, which is more U.S.-production focused than many peers, were little changed for the week. Auto parts retailers such as O'Reilly Auto rallied on expectations that Americans will keep their cars for longer, doing more repairs themselves.
Tesla Revs Highs, Gets Tariff Boost
Tesla rose, snapping a nine-week losing streak but fell back after hitting resistance at the 200-day line. Trump tariffs on autos will have some impact on Tesla, but it will benefit from industrywide U.S. price hikes as other automakers face much higher costs and supply issues. Earlier in the week, Canada froze $43 million in suspicious EV rebates for Tesla. Canada also excluded the U.S. EV giant from future EV rebates, explicitly as retaliation for Trump tariffs.
BYD Growth Accelerates
China EV and battery giant BYD reported earnings per share soared 73% while revenue leaped 52% to $37.84 billion. It was the best EPS gain since Q3 2023 while revenue growth accelerated for a third straight quarter. BYD forecast 2025 EV deliveries of 5.5 million, up 29% vs. last year's 4.272 million. That might be conservative. The company also plans to have 500 ultrafast charging stations in operation by early April, in time for the launch of Han L and Tang L EVs. The 1,000-kilowatt chargers are capable of adding 400 kilometers of range in five minutes. BYD also launched or unveiled several new EVs. BYD stock rose solidly for the week, extending a strong start to the year.
Stock Market News In Brief
Alibaba rose as it announced a new artificial intelligence model optimized to run on phones and laptops.
Atour Lifestyle reported a 45% EPS gain, in line with Q4 views. The Chinese hotel operator's revenue rose 35% to $285.5 million, modestly beating, though growth slowed for a fourth straight quarter. Shares fell below a buy point, trying to hold key support.
Broadcom announced new high-speed networking chips for artificial intelligence data centers that use less power than their predecessors. Power usage is a major concern for companies scaling AI computing clusters, along with data transmission speeds.
Axsome Therapeutics tumbled Tuesday on mixed test results for its experimental attention deficit hyperactivity disorder treatment. Though a lower 150-milligram dose led to a statistically significant improvement in symptoms compared with a placebo, the higher 300-milligram dose missed its mark. Axsome emphasized that dose was exploratory, noting the 150-milligram dose is already approved as a narcolepsy treatment called Sunosi.
Volkswagen said it's working with Mobileye and France's Valeo to upgrade its advanced driver assistance systems to Level 2+ in the company's future vehicle lineup. Mobileye initially jumped but pared gains.
GameStop jumped Wednesday on the company's move to invest in bitcoin, but the meme stock dived Thursday on a planned $1.3 billion convertible note offering to fund operations and buy the cryptocurrency. GameStop easily beat Q4 EPS views but a 28% revenue fall missed.
Dollar Tree said it would sell its Family Dollar business for just over $1 billion to private equity firms after buying the specialty discounter for over $8 billion in 2015. Also, Q4 earnings topped estimates, but revenue came in below views. Dollar Tree shares jumped.
Cintas on Monday announced it is dropping its $5.3 billion bid to acquire rival UniFirst, saying they weren't able to agree on terms. The uniform and office equipment seller on Wednesday reported fiscal Q3 EPS up 18% while revenue rose 8% to $2.61 billion.
Paychex narrowly topped expectations for Q3 results with 8% EPS growth on 5% revenue rise to $1.51 billion. The human resources and paycheck software provider in January announced plans to acquire rival Paycor for $4.1 billion, with the deal expected to close next month. PAYX stock rose solidly for the week, regaining a buy point.
Lululemon Athletica reported earnings rose 16% in the January-ended holiday quarter, with revenue up 13% to $36.11 billion, both beating and showing accelerating growth. But the athleisure retailer fell short on same-store sales while guidance was weak. Shares tumbled.
