U.S. stocks experienced a rally on Wednesday as President Trump announced a one-month exemption from auto tariffs for Mexico and Canada, providing relief to major automakers.
Stock market today
The tech-heavy Nasdaq Composite rose more than 1.4%, while the Dow Jones Industrial Average and the S&P 500 each increased by roughly 1.1%. This upward movement came after the White House granted a delay on tariffs that could have significantly affected U.S. automakers Ford, General Motors, and Stellantis. Shares of all three automakers rose by at least 5% in response to the announcement.
Previously, a wave of selling had hit stocks, with the S&P 500 hitting its lowest level in four months on Tuesday, erasing all post-election gains. Data from ADP also indicated adding only 77,000 jobs in February, significantly below expectations and hinting at potential weaknesses in the economy. This data provides context for the upcoming nonfarm-payrolls report scheduled for release on Friday.
The Dow Jones Industrial Average rebounded by 485.60 points, or 1.14%, closing at 43,006.59, recovering after a drop of over 1,300 points in the previous two sessions. The S&P 500 finished at 5,842.63, up 1.12%, while the Nasdaq Composite closed at 18,552.73, reflecting a rise of 1.46%.
The rally was fueled by the White House’s decision to delay tariffs on automakers whose cars comply with the United States-Mexico-Canada Agreement. Stellantis surged more than 9%, with General Motors and Ford seeing increases of over 5% and 7%, respectively. White House Press Secretary Karoline Leavitt mentioned that Trump was open to providing further exemptions on the tariffs.
Market analysts noted that the administration appears responsive to market pressures, with Ross Mayfield of Baird commenting that the White House will adapt policy as needed. The announcement led to a sharp increase in afternoon trading, with about three out of four S&P 500 members finishing higher. The Russell 2000, which focuses on small-cap stocks, rose by approximately 1%. Key technology stocks like Microsoft and Tesla also gained, suggesting a rebound after the tech sector had recently led broader market declines.
Despite the rally, uncertainty remains, particularly following Trump’s remarks regarding Canada’s fentanyl efforts, which he deemed as “not good enough” during a phone call with Prime Minister Justin Trudeau. The major indexes had fluctuated between gains and losses throughout the day due to ongoing tariff policy discussions.
The recent tension surrounding Trump’s trade policies has contributed to market volatility, with stocks showing declines in the prior two sessions. Despite Wednesday’s gains, the three major indexes remain down more than 1% week-to-date.
Market sector performance
While the broader market gained, the energy and utility sectors did not reflect this upward trend. The energy sector declined by 1.4% as oil prices dropped due to OPEC+ plans to gradually increase production. Additionally, the utilities sector fell by 0.51%. Key companies such as Marathon Petroleum and Valero were among those leading the energy sector decline, with shares falling nearly 5% and 4%, respectively.
In stock movements, Best Buy‘s recent pullback was seen as a potential buying opportunity, according to JPMorgan, which reiterated its overweight rating on the stock following a more than 13% decline the previous day. The analyst noted that pricing increases could be anticipated due to Trump’s tariffs on key supply chain sources, Mexico and China.
Meanwhile, William Blair maintained an outperform rating on AeroVironment despite the company’s weak earnings forecast, predicting more than 25% upside potential over the next year. Loop Capital upgraded Royal Caribbean to buy from hold after the cruise line’s analyst day revealed better-than-expected financial outlooks.
The Federal Reserve’s latest “Beige Book” report indicated rising concerns regarding tariffs, highlighting 45 mentions of tariffs across various economic districts, a significant increase from previous reports. The report characterized the overall economic activity as rising “slightly,” with a notable uptick in price increases reported in several areas.
In contrast, emerging markets have begun outperforming the S&P 500, with the iShares MSCI Emerging Markets ETF rising 6% year-to-date, while the S&P has declined by 1.4% amid increasing uncertainties tied to Trump’s trade policies.
Featured image credit: Nimisha Mekala/Unsplash
