Investing.com-- The S&P 500 closed higher Wednesday, after the White House announced a one-month delay for U.S. automakers that comply with the US – Mexico – Canada Agreement from the tariffs imposed on Mexico and Canada, cooling fears of a trade war.
At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average gained 485 points, or 1.1%, the S&P 500 index rose 1.1%, while the NASDAQ Composite added 1.5%.
The major stock indices plunged over the past two sessions, with the tech-heavy Nasdaq falling to within striking distance of correction territory, after Trump imposed 25% tariffs on Mexico and Canada, along with 20% levies on China, prompting swift retaliatory measures from the affected countries.
Trump granted a one-month delay to the U.S. automakers that comply with USMCA from newly imposed tariffs on Mexico and Canada, the White House announced on Wednesday.
Auto stocks including General Motors Company (NYSE: GM ), Ford Motor Company (NYSE: F ), and Stellantis NV (NYSE: STLA ) were sharply higher.
The news added to hopes that tariffs on Mexico and Canada that went into effect on Tuesday could be short-lived.
U.S. Commerce Secretary Howard Lutnick, in a Fox Business interview on Tusday, said that President Trump is prepared to "meet in the middle" with Canada and Mexico regarding the newly imposed tariffs.
The tariffs, which include a 25% duty on imports from Canada and Mexico, as well as an increase to 20% on Chinese goods, have raised concerns about economic growth and consumer prices in the U.S., which is already grappling with high inflation.
Data released earlier Wednesday showed that U.S. private payrolls increased at the slowest pace in seven months in February, stoking further worry about the economy following a slew of recent economic surprises to the downside.
The ADP National Employment Report showed that private payrolls increased by only 77,000 jobs last month, the smallest rise since July 2024, after an upwardly revised 186,000 gain in January.
Institute for Supply Management’s non-manufacturing PMI index, which accounts for a large bulk of the American economy, unexpectedly firmed in February, rising to a reading of 53.5 from 52.8 previously.
But in a sign that upsides risks to inflation remain, the prices paid component of the index rose to 62.6 from 60.4, topping estimates for a reading of 50.
The data come just days ahead of the nonfarm payrolls report for February due Friday.
Corporate earnings have generally been positive in the final quarter of last year, but "the downside risks to our upbeat forecasts for U.S. financial markets have increased,” according to Capital Economics. ”[T]he ‘Trump trade’ and the wider optimism around the U.S. economy and financial markets has faded in short order.”
Downbeat economic numbers, “a broader reassessment of the near-term economic outlook in the U.S.,” policy uncertainty together with weaker confidence among businesses, consumers and investors all combine to create “headwinds for equity markets,” Capital Economics said.
CrowdStrike (NASDAQ: CRWD ) stock fell more than 6% after the cybersecurity firm forecast first-quarter revenue slightly below estimates, due to weak spending on its cybersecurity products.
Campbell Soup Company (NYSE: CPB ) stock dropped nearly 3% after the packaged food company lowered its annual sales and profit forecasts, signaling weak demand for snacks amid intense competition from cheaper private-label brands.
Foot Locker Inc (NYSE: FL ) stock soared over 4% after the footwear retailer reported better-than-anticipated earnings and comparable sales for the fourth quarter of fiscal 2025.
(Peter Nurse, Ayushman Ojha contributed to his article.)