Stocks soared choppy trading on Wednesday, as investors welcomed a delay in US auto tariffs on its top trading partners.
In the afternoon, the Dow Jones Industrial Average jumped 504 points, or 1.2%, to 43,025.
The S&P 500 gained 1.2%, and the Nasdaq climbed 1.4%.
The main indexes turned positive after the Trump administration announced one-month delay of auto tariffs on Canada and Mexico.
Carmaker stocks rose, with Ford up 4.8% and General Motors up 6.2%. Tesla gained 1%.
Uncertainty around tariffs pressured the markets despite Commerce Secretary Howard Lutnick’s comment that Trump was considering granting some relief on import of items such as cars and autoparts, that comply with the US-Mexico-Canada free-trade agreement.
The remarks came after Trump escalated a global trade war on Tuesday as he imposed 25% tariffs on top trade partners, Canada and Mexico.
“We are on the tariff roller coaster,” Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. “The economic data, the Fed, and all that stuff seems to have been pushed to the background for now. It’s just a reminder how these policies have an impact in the long run and the markets are reacting to it.”
An ISM report earlier on Wednesday showed an unexpected rise in growth in the services sector in February. However, signs of increased input prices tempered optimism.
Separately, ADP data showed private payrolls increased at the slowest pace in seven months in February, ahead of Friday’s crucial payrolls report.
Yields on short-term Treasury bonds rose following the data, further pressuring equities. Traders now see the central bank lowering borrowing costs by at least thrice by 25 basis points by December, according to data compiled by LSEG.
Investors have sold riskier equities over the past few weeks on fears that Trump’s trade policies would amplify inflation pressures, slow the economy and eat into corporate profits, at a time when multiple reports have suggested a cooling economy.
“The long-term trend that we were in, which is the rally from the pandemic lows, has basically tapped out and on top of that you put Trump, whose policies — whether it’s tariffs, deportations or the extension of the 2017 tax cut – are all going to hurt the economy or cause inflation,” said Bill Strazzullo, chief market strategist at Bell Curve Trading in Boston.
Chipmaker Intel dropped 4.4% following Trump’s remarks that lawmakers should get rid of a law offering subsidies to the semiconductor industry.
CrowdStrike fell 7% after the cybersecurity firm forecast first-quarter revenue slightly below estimates.
Huntington Ingalls rose 13% after Trump said his administration will create an office of shipbuilding in the White House and offer tax incentives.
