Stocks end up. Trump floats another tariff exemption. This time, autos. Dow adds 300 pts
U.S. stocks closed higher, rebounding off their lows in the afternoon after President Donald Trump floated another tariff exemption - this time, for the auto industry.
Trump said he's exploring exemptions to his tariffs on imported vehicles and parts to give auto companies more time to establish U.S. manufacturing.
“I’m looking at something to help car companies with it. They’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here,” Trump told reporters Monday in the Oval Office.
The blue-chip Dow closed up 0.78%, or 312.08 points, to 40,524.79; the broad S&P 500 added 0.79%, or 42.61 points, to 5,405.97; and the tech-heavy Nasdaq gained 0.64%, or 107.03 points, to 16,831.48. The benchmark 10-year Treasury slipped to 4.38%.
Over the weekend, Trump carved out an exemption for smartphones, computers and other devices and components like semiconductors from the extra 125% tariffs he previously issued on all Chinese goods.
Apple, a big beneficiary of the exemption, rose more than 2%, but that was down from about 5% higher near the open.
Exemptions are seen as positive for the economy and markets, but analysts warn tariffs continue to be ambiguous and could swing either way, as investors have seen in the past few weeks.
"Stocks followed up their worst week since March 2020 with their best since November 2023," said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. "If the rebound is going to have legs in the near term, investors will probably need to see continued signs of flexibility from the White House on tariffs. Uncertainty is still high, and day-to-day volatility could remain elevated."
After the electronics exemption announcement, Commerce Secretary Howard Lutnick said in an interview on Sunday separate tariffs on the products were still "coming soon." He added "This is not a permanent sort of exemption."
Trump said in a social media post there was no exemption. Instead, "these products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff 'bucket.'”
Lutnick said pharmaceutical products would also be hit with their own separate tariff rate, to come within months.
"Some will certainly interpret a 1–2-month reprieve as a positive, and there will be strong expectations that the Administration won't follow through," said Mike O'Rourke, chief market strategist at JonesTrading. "Nonetheless, the President sent the trade hawks out to control the messaging...and that is a market negative. If there is a strong, retail-driven gap-up higher open (on Monday) on 'exemption euphoria,' it may be the last great selling opportunity of the year."
Former Treasury Secretary Janet Yellen on Monday joined a chorus of economists who have said Trump’s tariffs have escalated the risks of a recession.
“Recession probabilities have gone way up,” Yellen told CNBC during a “Squawk Box” interview, noting consumers will see a hit to their households that will curb their spending. She also said businesses would be reluctant to spend amid the uncertainty, further increasing odds for an economic slowdown.
Glum Americans
Consumers' view of the economy continues to deteriorate. Americans see a 44% chance unemployment will be up a year from now, according to a New York Federal Reserve consumer survey taken before tariffs were announced on April 2 but released Monday. The outlook was the gloomiest since April 2020, just after the start of the COVID-19 pandemic.
Consumers also expect near-term inflation to rise and the stock market to be lower a year from now, the survey showed.
Corporate news
Aside from tariffs, corporate earnings will begin in earnest. On Friday, major banks kicked off earnings season with mostly positive quarterly results but warnings the economic and tariff outlook were uncertain.
"Barring any surprises on the policy front, earnings could become more of a focus for the markets, with an emphasis on forward guidance," Larkin said.
Monday morning, investment bank Goldman Sachs reported better-than-expected results for the first three months of the year, boosted by a surge in equities trading before Trump’s tariff whiplash. Goldman's shares rose nearly 2%.
Later in the week, Bank of America, Citigroup, Netflix, Johnson & Johnson, and United Airlines are among the heavyweights due to report quarterly results.
Separately, Pfizer halted development of its experimental weight-loss pill, danuglipron because the drug might have caused a liver injury in a study participant. Shares gained nearly 1%.
Cryptocurrency
McDonald’s won’t be considering adding Bitcoin to its coffers.
The National Center for Public Policy Research (NCPPR) asked the fast-food giant to consider adding bitcoin to its treasury during its 2025 annual shareholders’ meeting next month, but McDonald’s informed the Securities and Exchange Commission (SEC) it could nix the proposal without facing an enforcement action. The SEC agreed.
That hasn’t hurt the price of bitcoin, though. The digital unit continues to trade in line with stocks, last up 1.46% at $84,918.64.
This story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.