The S&P 500 ended lower on Thursday, as investors grappled with U.S. President Donald Trump’s latest trade tariff announcement that hit shares of General Motors and Ford. The S&P/TSX Composite Index closed unchanged, with gains for gold miners offsetting losses for auto parts and technology shares.
Trump unveiled on Wednesday his plan to implement a 25% tariff on imported cars and light trucks effective on April 3, while the duty on auto parts begins on May 3. Investors are also bracing for a wave of reciprocal tariffs Trump plans to unveil on Wednesday, although the president has hinted there may be room for flexibility. Canadian Prime Minister Mark Carney said that he would respond with unspecified trade actions if Trump imposes the new auto tariffs.
In a volatile session on Wall Street, General Motors tumbled over 7% and Ford slid 3.9%. Car parts manufacturers Aptiv and BorgWarner each lost around 5%. Tesla edged up 0.4%, with investors betting the electric vehicle maker will be hurt less by tariffs because of its largely domestic production.
Apple added 1.05%, helping to limit the S&P 500’s loss.
Trump’s mercurial trade policies have created uncertainty on Wall Street, as investors fret over potential disruptions to supply chains, hampered investment, and the specter of inflation threatening global economic growth.
“Investors are really cautious and wary of Trump and his policies. Even more than the policies, just the constant flip-flopping,” said Jed Ellerbroek, a portfolio manager at Argent Capital in St. Louis, Missouri. “That makes people really nervous to make long-term investment decisions, whether we’re talking about companies or about investors.”
In economic news Thursday, the headline figure for U.S. fourth-quarter gross domestic product growth was revised to 2.4%, higher than the consensus estimate of 2.3% in a Reuters poll. Meanwhile, the number of Americans filing new applications for unemployment benefits slipped last week, while the jobless rate appeared to have held steady in March.
The S&P 500 declined 0.33% to end the session at 5,693.31 points. The Nasdaq dropped 0.53% to 17,804.03 points, while the Dow Jones Industrial Average declined 0.37% to 42,299.70 points.
The S&P/TSX composite index ended unchanged at 25,161.06, after posting on Wednesday its biggest decline in nearly two weeks.
The materials sector, which includes gold mining shares, added 1.7%, taking its gain since the beginning of the year to roughly 21%, the best performance by far among the TSX’s 10 major sectors.
The price of gold scaled a record peak as investors flocked to the safe-haven asset. U.S. gold futures climbed 1.3% to settle at US$3,061, also hitting an all-time high of US$3,071.30 earlier in the session.
“Looks like we’re going to see (gold futures hit) $3,100 here shortly and the main catalyst is safe-haven buying,” driven by uncertainty around Trump’s tariff plans, said Bob Haberkorn, senior market strategist at RJO Futures.
Shares of auto parts company Magna International Inc fell 6.9%, approaching the near four-year low it hit earlier this month. Linamar Corp shares were down 2.7%
Technology was also a drag in Toronto, losing 1.1%, and heavily weighted financials ended 0.3% lower.
Among Canadian stocks, Royal Bank of Canada was down 1.3%. CEO Dave McKay told investors Thursday that RBC will look to expand its foothold in capital markets and wealth management globally, setting the stage for fiercer competition with its peers on Wall Street.
Of the 11 S&P 500 sector indexes, eight declined, led lower by energy, down 0.85%, followed by a 0.84% loss in communication services.
Shares of Dollar Tree jumped 11% as several analysts raised their price targets after the discount retailer on Wednesday said it sold its struggling Family Dollar business for about $1 billion.
Investors on Friday will focus on the February personal consumption expenditures price index — the Federal Reserve’s favored inflation gauge.
Traders have trimmed their exposure to U.S. equities, with the S&P 500 down about 7% from its record high close on February 19. The Nasdaq is down almost 12% from its record high close on December 16. The S&P 500 and Nasdaq are both on course to conclude the first quarter of 2025 in negative territory. So far in 2025, the S&P 500 has lost about 3% and the Nasdaq is down almost 8%.
Fed policymakers Susan Collins and Thomas Barkin are expected to share their economic insights later on Thursday.
Shares of highly shorted Hertz and Avis Budget Group surged, as Trump’s plan to slap a 25% tariff on imported vehicles raised prospects of consumers opting for car rentals instead of buying expensive new cars.
The new levies could add thousands of dollars to the cost of an average vehicle in the United States.
“These rental companies actually benefit from the tariffs because if car prices are going to go up, maybe some people who are like, ‘You know what? I don’t travel that much. I’ll just rent a car’,” said Dennis Dick, chief strategist at the Stock Trader Network.
Hertz jumped 22.6% and Avis Budget gained 20.4% after both firms lost nearly half of their value in the past year.
Both Avis and Hertz are popular among short sellers, investors that bet on a stock’s decline, with 13% and 14.5% of their respective outstanding shares in short positions, per LSEG data.
“You get a little bit of a short squeeze here too and that’s really, really kick starting this rally,” Dick said.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio. The S&P 500 posted 15 new highs and seven new lows. The Nasdaq recorded 34 new highs and 195 new lows. Volume on U.S. exchanges was relatively light, with 14.7 billion shares traded, compared to an average of 16.3 billion shares over the previous 20 sessions.
Reuters, Globe staff