- US stock markets (Dow Jones, S&P 500) are experiencing volatility due to Trump administration tariffs.
- A one-month tariff exemption for US automakers has temporarily eased market pressure, but the long-term sustainability of this is uncertain.
- US economic data is mixed, with a services PMI showing growth but rising input costs.
- Technically, the Dow Jones is in a bearish trend but holding key support levels.
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Wall Street Indexes remain under pressure today but have held above the lows we saw on Tuesday as the Trump administration tariffs came into force. The announcement of tariffs on Mexico, Canada and China was met with retaliatory tariffs by Canada and China with Mexico expected to announce tariffs on Sunday.
However, US Commerce Secretary Lutnick yesterday stated that President Trump could relax some tariffs after talks with his Mexican and Canadian counterparts which has arrested the slide in Wall Street indexes for now.
A recent update from the White House revealed ongoing discussions between President Trump and Canadian Prime Minister Justin Trudeau. However, these talks have yet to yield any significant breakthroughs. Despite the lack of progress, market sentiment remains cautiously optimistic. The absence of fresh lows on U.S. indexes suggests that investors still believe in the possibility of a repeal or rollback of certain tariffs.
SPX 500 Heatmap
Source: TradingView
US indexes were helped a short while ago as the White House announced a one-month tariff exemption for automakers General Motors, Stellantis, and Ford on Wednesday afternoon.
“We are going to grant a one-month exemption on any autos passing through the USMCA [United States–Mexico–Canada Agreement],” a spokesperson stated during a press briefing. They added, “Reciprocal tariffs will still take effect on April 2, but at the request of companies associated with USMCA, the President is allowing this exemption to prevent any economic disadvantage.”
This move should not come as a surprise as automakers warned that tariffs could lead to significant price increases for consumers due to tariffs. The question however is whether such gains will remain sustainable moving forward or just temporary, as risk and uncertainty remain in play.
US Data continues to throw up warning signs however with a mixed US services PMI data print earlier in the day. February data revealed an unexpected uptick in growth within the services sector. However, optimism was moderated by emerging signs of rising input costs.
A sign that market participants remain concerned about future developments is reflected in the systematic equity positioning chart below. As you can see, systematic equity positioning is in the 60th percentile which indicates that it is not far from a neutral position and does not exhibit a strong bias towards either bullish or bearish positions, a sign of the markets uncertainty.
Source: Isablenet (click to enlarge)
US Data Ahead
US jobs payroll data still lies ahead on Friday and it should prove to be an interesting one.
New data from ADP showed the private sector added 77,000 jobs in February, much lower than the expected 140,000 jobs. This number is also far below the 186,000 jobs added in January, which was revised up from the earlier estimate of 183,000.
Tomorrow market participants will get a glance at initial jobless claims data before the all important NFP print on Friday.
Technical Analysis
Dow Jones
From a technical standpoint, the Dow Jones remains in a bearish trend but has shown some resilience holding above key support levels for now.
The index is trading at a confluence level as it hovers in the 61.8%-78.6% fibonacci retracement zone and between two key levels of 42764 and 42446. The longer price holds these levels the greater the probability of a recovery as we are seeing today.
The question is how far can a potential recovery run and a lot of this will depend on tariff development over the coming days.
Immediate resistance rests at 43402 and 43800 with a daily candle close above the 43800 leading to a change in structure. This would put bulls back in control from a technical analysis standpoint.
Immediate support rests at 42764 and 42446 before the 42000 handle comes back into focus.
Dow Jones (US30) Daily Chart, March 5, 2025
Source: TradingView (click to enlarge)
Support
Resistance
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