US Stocks Rebound As Investors Eye Potential Tariff Concessions

 NEW YORK, March 6 (Bernama-Xinhua) -- US stocks bounced back on Wednesday after two consecutive days of losses, as investors viewed US President Donald Trump's temporary tariff exemption for automakers as a sign of possible further concessions, reported Xinhua.

The Dow Jones Industrial Average climbed 485.60 points, or 1.14 per cent, to close at 43,006.59, partially recovering from its recent 1,300-point drop. The S&P 500 gained 1.12 per cent to end at 5,842.63, while the Nasdaq Composite rose 1.46 per cent to 18,552.73.

While most S&P 500 sectors advanced, the materials sector led gains with a 2.63 per cent increase, followed by consumer discretionary and industrials at 1.75 per cent and 1.5 per cent, respectively. Energy and utilities were the only two sectors that declined, down 1.51 per cent and 0.68 per cent, respectively.

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Markets received a boost after the White House announced a one-month delay on tariffs for automakers whose vehicles meet the requirements of the United States-Mexico-Canada Agreement (USMCA).

In the afternoon, Trump announced a one-month exemption from tariffs for automakers General Motors, Stellantis, and Ford. Anticipation of the exemption had already fueled a rally in these stocks earlier in the day.

"We are going to give a one-month exemption on any autos coming through USMCA," a White House spokesperson told reporters during a press briefing. "Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage."

Meanwhile, the Institute for Supply Management's (ISM) services index climbed to 53.5 in February, up from 52.8 in January and surpassing economists' expectations of 52.5. A reading above 50 signals growth in the sector, while a figure below indicates contraction. The ISM's prices paid index rose to 62.6 from January's 60.4, reflecting rising costs for businesses. The employment index also improved, reaching 53.9 compared to 52.3 in the previous month.

Wednesday's rebound gave investors a breather. As the S&P 500 slid nearly 6 per cent from its previous high on February 19, Ryan Detrick of Carson Research noted that the correction was still "mild". He cited 2023 as an example and said, "it had one 5 per cent mild correction and one 10 per cent correction. Even the best years have volatility."

The market is now pricing in three rate cuts from the Federal Reserve this year as traders increase their bets on Fed easing amid concerns about US economic growth, per the CME FedWatch Tool. "'Fed cuts because of weak economic data is not a good thing for markets anymore," Citi equity strategist Drew Pettit said. "If we were talking about this two months ago, you know, ‘Fed cuts against a resilient backdrop' was good for markets."  

-- BERNAMA-XINHUA