Stocks continue to rebound, but Tesla shares head in reverse
Stocks made a strong recovery on Monday, building on gains from the previous week. The positive momentum was driven by encouraging data on retail sales in the U.S., indicating that the economy is still moving forward despite some concerns. Jennifer Timmerman, an investment strategy analyst at Wells Fargo Investment Institute, noted that the February retail sales report suggested a modest economic slowdown rather than a recession.
The S&P 500 climbed 0.6%, closing at 5,675, while the Dow Jones Industrial Average rose by 0.8% and the Nasdaq Composite increased by 0.3%. These gains followed a healthy rebound on Friday, easing worries about a potential economic slowdown. However, investors remain cautious due to the uncertainty surrounding the Trump administration’s tariffs on various U.S. trading partners, including Canada, China, Mexico, and the European Union.
PepsiCo shares jumped by 2% after announcing a nearly $2 billion deal to acquire Poppi, a prebiotic soda brand. Meanwhile, Intel shares surged by 8% following the appointment of semiconductor industry veteran Lip-Bu Tan as its CEO. On the flip side, Tesla experienced a 5% drop in its stock price. The electric vehicle maker expressed concerns about the potential negative impact of the White House’s trade policies on EV manufacturers in a letter to the Office of the United States Trade Representative.
Looking ahead, financial markets are awaiting the Federal Reserve’s interest-rate decision on Wednesday. Although economists expect the central bank to maintain its benchmark rate, there is keen interest in Fed Chair Jerome Powell’s commentary on the potential impact of tariffs on inflation. With ongoing trade tensions and looming tariff deadlines, analysts anticipate increased volatility in the coming weeks. Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, highlighted the challenge for investors in navigating the uncertain policy environment.
In conclusion, while the markets show signs of stabilization, the overarching theme remains one of high policy uncertainty. Investors are faced with the dilemma of whether to buy on dips or sell on rallies amidst the ongoing trade disputes. The optimal strategy for President Trump, according to some analysts, may involve announcing reciprocal tariffs on April 2 and subsequently engaging in negotiations to lower them. As the situation unfolds, market participants will continue to monitor developments closely to navigate the complexities of the current economic landscape.
