NEW YORK — On Thursday, Wall Street experienced a subtle downturn, weighed down by mixed signals as President Donald Trump’s announcement of increased tariffs stirred the automotive sector. The S&P 500 saw a slight 0.3% drop after alternating between minor gains and losses. Meanwhile, more promising economic data offered some market support. The Dow Jones Industrial Average declined by 155 points, or 0.4%, and the Nasdaq composite took a 0.5% hit.
General Motors faced a significant setback, plummeting by 7.4% after the announcement of a 25% tariff on imported vehicles by Trump. Ford Motor also felt the pressure, decreasing by 3.9%. Despite the focus being on imported vehicles, U.S. automakers could still feel the adverse effects due to their extensive North American supply chains, as emphasized by Trump’s push for more domestic manufacturing.
“There are numerous uncertainties, and if these tariffs persist, they will undoubtedly bring challenges for companies,” noted UBS analyst Joseph Spak. A significant concern is the complexity of determining tariff applicability for parts under the U.S.-Mexico-Canada trade agreement that aren’t entirely made in the U.S., further complicating compliance tracking, Spak added.
Automakers outside the U.S. didn’t escape unscathed either. Hyundai Motor in Seoul fell by 4.3%, whereas in Tokyo, Honda Motor and Toyota Motor diminished by 2.5% and 2%, respectively. However, U.S. electric vehicle manufacturers like Rivian and Tesla fared better, as their production is predominantly U.S.-centric. Rivian experienced a 7.6% surge, and Tesla, led by Elon Musk, added a modest 0.4%, even after reducing earlier gains.
Positive momentum also appeared among auto parts retailers as they stand to benefit from a potential decrease in new car purchases. AutoZone rose by 4%, O’Reilly Automotive climbed 3.1%, and CarMax, a significant player in the used car market, went up by 2.5%.
The international stock markets may continue to exhibit volatility as an approaching April 2 deadline looms for tariff actions, termed “Liberation Day” by Trump. He intends to implement tariffs reflective of the disparities imposed on American trade by partner nations, including factors like value-added taxes. Despite hopes that Trump might reconsider implementing more selective, less severe tariffs, the current environment of uncertainty has already led to a more cautious sentiment among U.S. businesses and consumers, which could threaten economic growth.
Nevertheless, recent indications suggest the economy is maintaining its stability. Data from Thursday reflected a slight decrease in unemployment benefit claims, hinting at a potential “low fire, low hire” steadiness in the job market. Another report revised the U.S. economic growth rate upwards for the final quarter of last year. This favorable economic data supported relatively stable Treasury yields, with the 10-year Treasury yield inching up slightly from 4.35% to 4.36%.
On Wall Street, Petco Health & Wellness soared by 31.6% as it surpassed quarterly earnings expectations. The day’s trading concluded with the S&P 500 down by 18.89 points to 5,693.31, the Dow Jones Industrial Average decreasing to 42,299.70 after a 155.09-point drop, and the Nasdaq composite down by 94.98 to 17,804.03.
Globally, European markets mostly declined following a mixed session in Asia. The Nikkei 225 in Japan shrank by 0.6%, impacted by automotive sector losses, prompting Japanese Prime Minister Shigeru Ishiba to express concern over the application of tariffs to Japan. Meanwhile, markets in China showed modest growth, with Shanghai edging up by 0.1% and Hong Kong by 0.4%. Chinese automotive and parts manufacturers, though expanding internationally, remain minimally affected by the tariffs due to a limited presence in the U.S.