Investing.com-- U.S. stocks mostly edged higher Wednesday, bouncing after recent losses on talk of a possible compromise to President Donald Trump’s imposition of substantial tariffs on imports from neighboring nations.
At 09:40 ET (14:40 GMT), the Dow Jones Industrial Average gained 65 points, or 0.2%, the S&P 500 index rose 3 points, or 0.1%, while the NASDAQ Composite slipped 20 points, or 0.1%.
The major stock indices plunged over the past two sessions, with the tech-heavy Nasdaq falling to within striking distance of correction territory, after Trump imposed 25% tariffs on Mexico and Canada, along with 20% levies on China, prompting swift retaliatory measures from the affected countries.
Trump ready to "meet in middle" with Canada, Mexico
However, sentiment has been boosted by U.S. Commerce Secretary Howard Lutnick indicating, in a Fox Business interview, that President Trump is prepared to "meet in the middle" with Canada and Mexico regarding the newly imposed tariffs.
This statement suggested potential negotiations to alleviate the trade tensions that escalated following the enforcement of these tariffs on Tuesday.
The tariffs, which include a 25% duty on imports from Canada and Mexico, as well as an increase to 20% on Chinese goods, have raised concerns about economic growth and consumer prices in the U.S., which is already grappling with high inflation.
That said, President Trump was insistent of the need for these tariffs against America’s biggest trading partners during an address to Congress on Tuesday evening, calling for an end to what he saw as unfair trading practices.
“We’ve been ripped off for decades, and we will not let that happen any longer,” Trump said. “Tariffs are about making America rich again, making America great again.”
Services PMI data in focus
Recent economic data has pointed to a weakness of consumer sentiment, and with this in mind investors will likely be keeping close tabs on fresh data on activity in the all-important U.S. services sector.
Economists expect the Institute for Supply Management’s non-manufacturing PMI index to show that the segment, which accounts for a large bulk of the American economy, eased slightly in February.
Earlier this week, an ISM metric tracking the manufacturing industry cooled, but remained just above the 50-point level denoting expansion. However, a separate gauge of factory gate prices surged to a three-year peak and new orders slumped, as firms expressed worries over an uncertain operating environment stemming from the tariffs.
Data released earlier Wednesday showed that U.S. private payrolls increased at the slowest pace in seven months in February.
The ADP National Employment Report showed that private payrolls increased by only 77,000 jobs last month, the smallest rise since July 2024, after an upwardly revised 186,000 gain in January.
Downside risks to earnings forecasts
Corporate earnings have generally been positive in the final quarter of last year, but "the downside risks to our upbeat forecasts for U.S. financial markets have increased,” according to Capital Economics. ”[T]he ‘Trump trade’ and the wider optimism around the U.S. economy and financial markets has faded in short order.”
Downbeat economic numbers, “a broader reassessment of the near-term economic outlook in the U.S.,” policy uncertainty together with weaker confidence among businesses, consumers and investors all combine to create “headwinds for equity markets,” Capital Economics said.
CrowdStrike (NASDAQ: CRWD ) stock fell 8% after the cybersecurity firm forecast first-quarter revenue slightly below estimates, due to weak spending on its cybersecurity products.
Campbell Soup Company (NYSE: CPB ) stock dropped 3% after the packaged food company lowered its annual sales and profit forecasts, signaling weak demand for snacks amid intense competition from cheaper private-label brands.
Foot Locker Inc (NYSE: FL ) stock soared over 8% after the footwear retailer reported better-than-anticipated earnings and comparable sales for the fourth quarter of fiscal 2025.
Crude falls sharply
Oil prices fell Wednesday, trading around five-month lows as traders digested plans by major producers to raise output in April as well as the potential for a global trade war.
By 09:40 ET, the US crude futures (WTI) dropped 2.6% to $66.44 a barrel, while the Brent contract fell 2.1% to $69.53 a barrel, close to the five-month lows seen earlier this week.
The oil market has been weighed by news that the Organization of the Petroleum Exporting Countries and allies like Russia, known as OPEC+, plans to proceed with a planned output increase in April, as well as the news of U.S. tariffs on Canada, Mexico and China.
(Ayushman Ojha contributed to his article.)
