Stocks rebound as automakers get some tariff relief

U.S. President Donald Trump allowed a one-month pause on tariffs for automakers that comply with a trilateral trade deal between the U.S., Canada and Mexico. The White House also signaled that Trump is “open” to more tariff exemptions.

Stocks in the U.S. rose in a relief rally, helping to cushion some of Tuesday’s sell-off sparked by the official inauguration of tariffs. The relief, however, may be temporary. Wall Street is already pricing in lower earnings because of headwinds associated with the Trump administration. Meanwhile, private companies added far fewer jobs in February than expected, suggesting some belt-tightening in the corporate world because of economic uncertainty.

But U.S. Commerce Secretary Howard Lutnick said none of this has to do with Trump. “You’re looking at Biden data,” Lutnick argued in a Bloomberg Television interview, saying that former President Joe Biden left Trump with “a pile of poop.”  

Automakers granted relief for now
U.S. President Trump granted automakers a one-month exception from his 25% tariffs on Canada and Mexico, as well as his reciprocal tariffs coming into effect April 2, U.S. Press Secretary Karoline Leavitt said Wednesday on behalf of Trump. The same day, Canada requested consultations with the U.S. at the World Trade Organization over “unjustified tariffs,” Canada’s ambassador to the WTO said. Read the latest developments on Trump tariffs here.

Earnings estimates coming down
The complacency around tariffs is dissipating, wrote CNBC’s Bob Pisani. The stock market is starting to price in lower earnings because of “everything from tariffs to a growth slowdown to inflation, DOGE, and budget issues,” Marc Chandler from Bannockburn Forex told CNBC. For sure, it’s typical for analysts to reduce earnings estimate in the first part of the quarter. But the numbers are coming down faster than usual, Pisani wrote.

Markets rebound
U.S. markets rebounded on Wednesday after Trump said he was open to more concessions on tariffs. The S&P 500 rose 1.12%, the Dow Jones Industrial Average climbed 1.14% and the Nasdaq Composite rallied 1.46%. The pan-European Stoxx 600 index added 0.91%. The DAX index jumped 3.38% on the back of strong performances by German stocks and news of the country’s potential coalition government planning to boost fiscal spending.

Job additions at private companies slow
Private companies added just 77,000 new workers in February, well off the upwardly revised 186,000 in January and below the 148,000 Dow Jones consensus estimate, according to seasonally adjusted figures from ADP. The total was the smallest increase since July and comes at a time when worries are swirling over slowing economic growth and tariff-induced inflation.

U.S. Commerce Secretary blames Biden
U.S. Commerce Secretary Howard Lutnick argued Wednesday that former President Joe Biden — not his boss, Trump — is to blame for recent negative economic data and a plunge in stock prices. “The president spoke about it last night,” Lutnick said in an interview on Bloomberg Television. “He said Biden left him a pile of poop.” The U.S. economy grew by 2.8% in the past year, and the inflation rate in December was 2.9%.

[PRO] Investors head back to bonds
Bonds are resurging in popularity over stocks during this tumultuous period. On Wednesday, the 10-year U.S. Treasury yield hovered around 4.2%, after topping 4.8% in mid-January. Bond prices move inversely to yields, meaning they have been going up recently, while the S&P has fallen more than 1% for the year. These are some reasons why investors are turning to bonds.

Germany’s fiscal U-turn could be a ‘game changer’ for the country’s sluggish economy, analysts say

On Tuesday, Germany’s likely-to-be chancellor Friedrich Merz and other political leaders announced plans to reform the long-standing fiscal pillar known as Germany’s debt brake, specifically to allow for higher defense spending. They also revealed a new 500 billion euros ($535 billion) special fund for infrastructure.

“Big, bold, unexpected – a game changer for the outlook,” Bank of America Global Research economists and analysts said in a Wednesday note, adding that the package “meaningfully” changed the outlook for Germany’s economy.

Markets can expect an economic boost and Germany’s growth estimates could likely be increased thanks to the planned special investment vehicle, Florian Schuster-Johnson, senior economist at Dezernat Zukunft, told CNBC’s “Street Signs Europe” on Wednesday.