NEW YORK (AP) 鈥� U.S. stocks rallied after President Donald Trump pulled back on some of his tariffs, raising hopes he may avoid a worst-case trade war that grinds down economies and sends inflation higher. The S&P 500 rose 1.1% Wednesday, bouncing back from its sell-off that had erased all of its 鈥淭rump bump鈥� since Election Day. The Dow Jones Industrial Average also added 1.1%, and the Nasdaq composite gained 1.5%. The market turned higher after Trump said he鈥檚 granting a one-month exemption for U.S. automakers on his stiff new tariffs for Mexican and Canadian imports. Jumps for Ford and GM stock helped lead the market.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
NEW YORK (AP) 鈥� U.S. stocks are rallying Wednesday after showed again that his latest word on tariffs won't always be his last. By , Trump revived hope on Wall Street that he may avoid a worst-case trade war that grinds down economies and sends inflation higher.
The S&P 500 was 1.3% higher in late trading, bouncing back from that had erased all of its " since Election Day. The Dow Jones Industrial Average was up 573 points, or 1.3%, with a little less than an hour remaining in trading, and the Nasdaq composite was 1.6% higher.
The market turned sharply upward after Trump said he's granting a one-month exemption for U.S. automakers on his stiff new tariffs for Mexican and Canadian imports. Trump made the move after talking with Ford, General Motors and Stellantis, which owns Chrysler.
All of the Big Three automakers could have been hurt by such tariffs because of how much production happens across the countries. Trump's announcement sent relief through Wall Street, and Ford's and General Motors' stock both jumped more than 5% to help lead a widespread rally across the market.
The worry has been that such tariffs would not only hurt profits for companies but also jack up prices for cars and other bills for U.S. households that are already struggling with still-high inflation. The hope is that Trump is using the threat of tariffs as a tool for negotiation and that he may ultimately institute less painful moves 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 on the United States' largest trading partners, including on China. His latest move may also simply add more uncertainty to a market that's already reeling from it. It was just on Monday that Trump had said there was 鈥渘o room鈥� left for negotiations that could lower the tariffs on Mexico and Canada, which took effect Tuesday and .
鈥淭he economic impact and consumer impact is still ahead of us,鈥� said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. 鈥淚t comes back to what no one really knows, and that is how long these tariffs stay in place.鈥�
Even if tariffs ultimately end up being less harsh than feared, just the threat of them has already had a negative effect on U.S. households and businesses.
Confidence among U.S. consumers because of expectations for higher inflation because of tariffs. Businesses, meanwhile, are struggling to keep up with all the changes coming from Washington, and U.S. amid worries about tariffs.
A couple reports on Wednesday gave a mixed read on the U.S. economy鈥檚 strength. One suggested U.S. employers pulled back sharply on their hiring last month. The report from ADP could be a warning signal ahead of the more comprehensive jobs report that鈥檚 coming Friday from the U.S. Labor Department.
A separate report said growth for U.S. finance, real estate and other businesses in the services sector is better than economists expected. But businesses also said in the survey they鈥檙e confronting 鈥渃haos鈥� and uncertainty because of tariffs, according to the Institute for Supply Management.
Altogether, a recent stream of weaker-than-expected reports on the U.S. economy has raised the possibility of a worst-case scenario known as 鈥渟tagflation.鈥� It's something that doesn鈥檛 happen often, where the economy is stagnating and is high, and policy makers at the Federal Reserve don鈥檛 have a good tool to fix it.
The U.S. running at a solid pace. If it were to weaken sharply, the Fed could cut its main interest rate in hopes of making borrowing easier and goosing the economy. But rate cuts put upward pressure on inflation. If prices for eggs and other everyday items were rising because of tariffs, that could box in the Fed.
For his part, Trump said in an address before Congress Tuesday night that he鈥檚 going ahead with , with more on track to go into effect on April 2.
鈥淭ariffs are about making America rich again and making America great again,鈥� he said. 鈥淎nd it鈥檚 happening and it will happen rather quickly. There will be a little disturbance, but we鈥檙e OK with that.鈥�
On Wall Street, Brown-Forman jumped 9.9% after the company behind Jack Daniel鈥檚 reported stronger profit for the latest quarter than analysts expected. Perhaps more importantly, CEO Lawson Whiting also said his company isn鈥檛 changing its forecasts for upcoming sales, even as 鈥渨e anticipate continued uncertainty and headwinds in the external environment.鈥�
Whiting said the decision by Canadian provinces to take U.S. whiskeys off their store shelves is 鈥渨orse than a tariff because it鈥檚 literally taking your sales away,鈥� adding that the action is 鈥渁 very disproportionate response to a 25% tariff.鈥� But he also said Canada accounted for only 1% of Brown-Forman鈥檚 total sales.
On the losing end of Wall Street was Campbells. The food company fell 2.1% after cutting some of its financial forecasts, citing discouraging trends for its snack products
In the bond market, the yield on the 10-year Treasury rose to 4.27% following the report on U.S. services businesses from 4.18% just before. That helped it recover some of its sharp slide since January, when it was approaching 4.80%, after worries about the economy's growth weighed on yields
In stock markets abroad, indexes rose across much of Asian and Europe. Indexes climbed 2.8% in Hong Kong, 1.2% in South Korea, and 1.6% in France.
Germany stocks rallied 3.4% as the prospective partners in the country鈥檚 said they want to loosen rules that would allow for more debt.
Stocks outside the United States than the S&P 500, even with Trump鈥檚 America-First policies.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Choe And Damian J. Troise, The Associated Press
