Investing.com - The S&P 500 cut some losses Tuesday after Canada backed away from its tariff hike on electricity exports to the U.S., but the tit-for-tat tariff war sowed uncertainty, souring investor sentiment.
At 4:00 p.m. ET (20:00 GMT), the benchmark S&P 500 fell 0.8%, the tech-heavy Nasdaq 100 fell 0.2%, and the 30-stock Dow Jones Industrial Average dipped by 478 points or 1.1%.
Canada on Tuesday agreed to suspend its 25% hike on electricity exports to the United States after agreeing to meet on Thursday to discuss a pathway to renew the North American trade agreement ahead of a Trump-imposed Apr. 2 reciprocal tariff deadline.
U.S. President Donald Trump on Tuesday said he would double a planned tariff on all steel and aluminum imports into the U.S. from Canada, pushing the total levy up to 50%, following a move by the province of Ontario to slap a 25% duty on electricity exported into the U.S.
White House senior counselor for trade and manufacturing Peter Navarro said, however, that Trump’s threat to double the tariffs he previously announced on Canadian steel and aluminium imports into the U.S. will no longer be going into effect tomorrow.
Trump said that he would "probably" back down from his tariff threat, but didn’t expand further on what a potentially less harsh levy would entail.
The backing away from the brink of a trade war helped cool investor fears, helping markets briefly cut the bulk of losses, but resume their selloff a son-and-off tariffs continued to sow investor uncertainty.
In individual stocks, shares in Delta Air Lines (NYSE: DAL ) fell more than 7%, adding to losses logged on Monday, after the carrier issued a profit warning on concerns about soft domestic amid growing U.S. economic uncertainty.
Delta now expects to post first-quarter profit per share of $0.30 to $0.50, versus previous estimates of $0.70 to $1.00. Revenue growth is also tipped to grow 3% to 4% on a year-on-year basis, down from earlier guidance of 7% to 9%.
“Consumers in a discretionary business do not like uncertainty,” CEO Ed Bastian told CNBC, noting that corporate spending in particular is starting to stall.
Southwest Airlines Company (NYSE: LUV ) bucked the trend, rising more than 8% after the budget airline unveiled new checked bag fees and said it would launch a new basic fare tier.
Elsewhere, software group Oracle’s (NYSE: ORCL ) stock price dropped 3%, as investors assessed a modest shortfall in fiscal third-quarter results and weaker-than-anticipated current-quarter guidance.
However, the firm unveiled a surge in bookings that far outstripped Wall Street expectations, with Chairman Larry Ellison pointing to “record levels” of customer demand.
Kohl’s Corp (NYSE: KSS ), meanwhile, slumped 24% to a fresh 52-week low after reporting guidance and Q4 results that fell short of estimates.
Tesla Inc (NASDAQ: TSLA ) rose more than 3%, side stepping the broader market rout as the EV maker attempts to rebound following its recent rout. Some Tesla bulls on Wall Street have warned that the Tesla CEO Elon Musk needs to balance his efforts on DOGE with that of Tesla.
"We believe this is a "moment of truth" for Musk and Tesla....if Musk continues to head down the DOGE path 110% and showing no attention to Tesla during this turbulent time then brand damage will become more pervasive as right now our work in the field shows less than 5% (very contained) of Tesla owners would second guess buying a Tesla again due to Musk," Wedbush said in a recent note.
(Scott Kanowsky contributed to this report)