Stan Cho and Damian J. Troys
NEW YORK (AP) — US stocks have been raised after President Donald Trump pulled back some of his tariffs. The S&P 500 rose 1.1% on Wednesday, bounced back from a sale that erased all “Trump Bumps” since Election Day. The Dow Jones industrial average also added 1.1%, while Nasdaq composites increased by 1.5%. The market has risen after Trump said he has allowed US automakers a month’s exemption with his strict new tariffs on Mexican and Canadian imports. The jump in Ford and GM stocks helped lead the market.
This is a news update. Previous stories about the AP are as follows:
NEW YORK (AP) — US stocks gather on Wednesday after President Donald Trump once again showed that his latest words on tariffs aren’t always his last. By temporarily pulling back some of his tariffs, Trump may revive hopes on Wall Street, shatter the economy and avoid the worst trade war that will bring higher inflation.
The S&P 500 bounced back from a sale that saw the deal go 1.3% higher with a delayed deal and erased all “Trump Bumps” since Election Day. The Dow Jones industrial average rose 573 points (1.3%), remaining under an hour in trading, while Nasdaq Composite was 1.6% higher.
The market rose sharply after Trump said he was allowing US automakers a month’s exemption with his strict new tariffs on Mexican and Canadian imports. Trump made the move after talking to Ford, General Motors and Stellantis, who own Chrysler.
All three large automakers may have been hurt by such tariffs because of how much production will occur across the country. Trump’s announcement sent bailouts through Wall Street, with Ford and General Motors stocks both rushing over 5%, leading the wider rallies across the market.
The worry is that such tariffs not only hurt corporate profits, but also jack up the prices of cars and other bills for US households who are already suffering from high inflation. The hope is that Trump uses tariff threats as a tool for negotiations and might ultimately establish a less painful move for the economy and global trade if he can win what he wants.
Of course, Trump did not roll back all of the tariffs he announced in the US’s biggest trading partner, including China. His latest move may just add more uncertainty to the market that has already been caught up in. It was Monday when Trump said “there are no rooms” for negotiations that could lower tariffs in Mexico and Canada, which came into effect Tuesday and caused the US stock market to fall.
“The economic and consumer impacts are still ahead of us,” said Sameer Samana, Global Equity and Real Assets Director at Wells Fargo Investment Institute. “It’s coming back to something no one really knows. That’s how long these tariffs stay.”
Even if tariffs are harsher than ultimately feared, their threat is already having a negative impact on US households and businesses.
The trust among our consumers has become sour due to expectations of higher inflation due to tariffs. Meanwhile, businesses are struggling to keep up with all the changes from Washington, and US manufacturers said their growth is nearing a stall amid concerns over tariffs.
The couple’s report on Wednesday gave a complicated reading about the strength of the US economy. It suggested that our employer had a sharp turnaround in his employment last month. A report from the ADP could be a warning signal ahead of the more comprehensive employment report coming Friday from the U.S. Labor Service.
Another report said growth in U.S. finance, real estate and other companies in the services sector is better than economists expect. However, the companies also said they face “chaos” and uncertainty due to tariffs, according to the Supply Management Institute.
Overall, the weaker than expected stream of reports about the US economy increased the likelihood of the worst-case scenario known as “stagflation.” The economy is often stagnant and inflation is high, and Federal Reserve policymakers don’t have a good tool to fix it.
The US economy ran at a solid pace last year. If that weakened sharply, the Fed could cut key interest rates in the hopes of making borrowing easier and taking away the economy. However, rate reductions put upward pressure on inflation. If the prices of eggs and other everyday items were rising due to tariffs, it could potentially go into the box with the Fed.
On his part, Trump said in a speech before Congress Tuesday night that he was moving forward with tariffs.
“Taxes are about enriching America again and making America great again,” he said. “And that’s happening and it’s going to happen pretty quickly. There’s a bit of interference, but that’s fine.”
On Wall Street, Brown Forman jumped 9.9% after the company behind Jack Daniels reported stronger profits than analysts expected. Perhaps more importantly, CEO Lawson Whiting also said his company has not changed its forecasts for future sales, even though it “anticipates continued uncertainty and headwinds in the external environment.”
Whiting said the decision to take Canadian whiskey from store shelves was “worse than tariffs because it’s literally taking away sales,” adding that the action was a “very disproportionate response to the 25% tariff.” However, he also said Canada accounts for only 1% of Brown Forman’s total revenue.
On the losing end of Wall Street was Campbell. Food companies fell 2.1% after cutting some of their financial forecasts.
In the bond market, reports on the US services business rose from 4.18% to 4.27% just before. It helped to recover some of that sharp slide from January when concerns about economic growth were approaching 4.80% after weighing in yields
In overseas stock markets, indexes rose in most parts of Asia and Europe. In Hong Kong, the index rose 2.8%, in South Korea, and 1.2%, in France.
German stocks rose 3.4% as the country’s next government future partners said they wanted to loosen rules that allow for more debt.
Stocks outside the US are doing better than the S&P 500, even Trump’s first American policy.
AP business writers Matt Ott and Elaine Kurtenbach contributed.
Original issue: March 5th, 2025, 4:15pm EST
