Stocks Trade Higher On Trump's Reported Plan To Delay Auto Tariffs

Stocks finished positive territory Wednesday following a report that said the Trump administration would delay tariffs on autos for six months.

The Dow Jones Industrial Average, which had been down by as much as 190 points, ended up 115 points, or 0.45%, to 25,648, the S&P 500 advanced 0.58% and the Nasdaq climbed 1.13%.

The Trump administration plans to delay auto tariffs by up to six months, CNBC reported, stopping itself for now from further widening global trade conflict. The White House faces a Saturday deadline to decide whether to slap duties on car and auto part imports. By law, the administration has another 180 days to come to a decision as long as it is "negotiating" with its counterparts, according to the CNBC report.

"Rising tariffs are a marginal headwind for growth, just as the U.S. economy is showing signs of strength," said Jason Pride, chief investment officer of private wealth at Glenmede. "Even if China were to run out of products to tariff, they still have other non-tariff tools available to discourage consumption of U.S. goods such as quotas or PR campaigns against U.S. firms."

In other trade news, Treasury Secretary Steven Mnuchin said Wednesday the Trump administration is nearing a deal with Canada and Mexico to remove U.S. steel and aluminum tariffs. U.S. Trade Representative Robert Lighthizer is in "active discussions" over the issue, Mnuchin said.

Stocks had traded lower earlier in the session following a Census Bureau report that retail sales in April slipped by 0.2% from March levels due to a slump in auto sales. Economists had projected an increase of 0.2%.

Jim Cramer and the Action Alerts PLUS team said that "while the reading was somewhat disappointing, one month does not indicate a trend and we believe the silver lining to be that it will increase pressure on the (Federal Reserve) to remain dovish and patient, holding off on rate hikes until the data is consistent and supportive of one."

"As a result, our focus remains on the U.S./China trade dispute as we believe the next steps taken on this front will be crucial for the market," the AAP team said. "We believe a rally is in store should a deal come through; however, should the U.S. enact tariffs on additional imports, we believe it could be a material negative for the tech sector in particular and cause a market-wide selloff as a result."

A Deutsche Bank study found that, if imposed, President Donald Trump's threatened import tariffs could drive up annual costs for the average family of four by more than $2,300, while a Trade Partnership Worldwide study showed that an average U.S. family of four are already paying an extra $767 annually because of Trump's tariffs.

Walt Disney shares rose 1.2% to $134.73 in afternoon trading amid a published report that the company is laying off personnel at both its own and its newly acquired Fox media operations. Variety reported the cuts are being made in film staff. More details are expected once the layoffs have been complete, Variety reported citing an unnamed sources.

Shares of Alibaba Holding rose 1.6% to $177.60 after the online commerce company posted stronger-than-expected fourth-quarter earnings.

Macy's posted stronger-than-expected first-quarter earnings, and reaffirmed its full-year guidance, as the struggling retailer notched a surprise uptick in same-store sales growth. Shares fell 0.55% to $21.70.

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Tilray rose slightly to $48.90 after the Canadian cannabis company posted stronger-than-expected first-quarter sales, while its domestic rival Aurora Cannabis rose 3.5%to $8.67 despite missing analysts' forecasts amid caps on retail store growth in the Canadian market.

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Walt Disney is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells DIS? Learn more now.

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