Dow Jones rallies as President Donald Trump agrees to delay tariffs
Dow Jones rebounded at the end of yesterday’s trading session, gaining 1.14%, after President Donald Trump agreed to delay tariffs on some vehicles manufactured in North America until April 2.
“We will grant a one-month tariff exemption for any vehicles complying with USMCA… to ensure they are not at a disadvantage.
“However, reciprocal tariffs will still take effect on April 2,” said White House Press Secretary Karoline Leavitt.
The North American auto supply chain is highly integrated between the U.S., Canada, and Mexico.
The decision to postpone these tariffs is seen as a short-term positive signal for the stock market, as it suggests that trade relations among the three countries are avoiding further strain. This contributed to the Dow Jones rally during yesterday’s session.
However, Trump’s one-month tariff delay is merely a temporary relief and does not fully alleviate corporate concerns.
The lingering uncertainty makes it difficult for businesses to engage in long-term planning, leading to cautious sentiment in the stock market.
On another front, China has responded forcefully to the U.S. tariff hike, which raised import duties from 10% to 20%. This has kept fears of an escalating trade war alive. Given that the stock market remains highly sensitive to economic and political signals, ongoing tariff uncertainties could continue to drive negative volatility, prompting investors to be more cautious.
Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, stated, “Tariffs alone are not enough to significantly impact the economy.” Apart from trade tensions, geopolitical risks and lackluster economic growth prospects have also contributed to the stagnation of the stock market, including the Dow Jones.
After Washington halted military aid to Kyiv on Monday, European nations rushed to increase defense spending and maintain support for Ukraine, raising concerns over the U.S.’s commitment to NATO allies in Europe. These factors have heightened geopolitical risks, negatively impacting investor sentiment and making the stock market less attractive.
In another development, the S&P Global Services PMI (Feb) report, released on Wednesday, came in slightly better than economists’ expectations, offering a temporary bright spot for the Dow Jones and the broader market. However, the ADP Non-Farm Employment Change (Feb) report, released the same day, recorded 77K, significantly lower than the forecast of 141K and the previous figure of 186K. Overall, Wednesday’s data was not strong enough to suggest a recovery in economic health.
While current market data supports a widespread cautious sentiment, those anticipating a short-term recovery should pay attention to U.S. economic data scheduled for Friday, including the Non-Farm Payrolls (NFP) report and the Unemployment Rate. These numbers could influence market direction in the coming sessions.