Wall Street holds steadier, for now at least, after its sell-off.

The U.S. stock market is holding a bit steadier on Wednesday, for now at least, following the sharp tumble that wiped out the last of the “Trump bump” it received following the presidential election in November.

The S&P 500 was up 0.3% in early trading after losing 6% since setting its all-time high last month and returning to where it was before President Donald Trump’s election. The Dow Jones Industrial Average was up 180 points, or 0.4%, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.

Sharper moves may still be ahead in the day, though, with a couple potential flashpoints already on the calendar. In less than a half hour, a report will show how retailers, restaurants and other businesses in the U.S. services industries are faring.

Perhaps more consequentially, Trump may announce later on Wednesday whether he’ll modify the tariffs he placed on Mexico, Canada and China early Tuesday. The moves caused the United States’ largest trading partners to retaliate with their own tariffs, raising the risk of a punishing trade war that hurts the economies of all involved.

Economists say such tariffs could not only raise prices for U.S. households but also gum up global trade and slow the economy. That’s raising the possibility of a worst-case scenario known as “stagflation.” It’s something that doesn’t happen often, where the economy is stagnating and inflation is high, and policy makers at the Federal Reserve don’t have a good tool to fix it. 

The rise of such worries has sent U.S. stocks sharply lower recently, eliminating gains that erupted after Election Day on hopes that Trump would lessen regulations on businesses, cut taxes and make other moves that would strengthen corporate profits and the overall economy.

For his part, Trump said in an address before Congress Tuesday night that he’s going ahead with tariffs, with more on track to go into effect on April 2, even if they cause “a disturbance.”

“Tariffs are about making America rich again and making America great again,” he said. “And it’s happening, and it will happen rather quickly. There will be a little disturbance, but we’re OK with that.”

U.S. businesses and households, though, have been sending signals that they’re worried. U.S. consumers are bracing for higher inflation because of the possibility of tariffs, and their confidence has soured sharply. Businesses, meanwhile, are struggling to keep up with all the changes coming from Washington, and U.S. manufacturers said their growth is approaching stall-speed amid worries about tariffs.

The Federal Reserve may offer more clues when it releases what’s called its Beige Book in the afternoon. It collects anecdotes from businesses around the country, describing what they’re seeing at the local level.

The U.S. economy closed out last year running at a solid pace. If it were to weaken sharply, the Fed could cut its main interest rate in hopes of making borrowing easier and goosing the economy. But such moves typically also can put upward pressure on inflation. If prices for eggs and other everyday items are rising because of tariffs, that could box in the Fed.

On Wall Street, automakers rose amid hopes that Trump may temper his tariffs on Mexico and Canada, which are integral the production of many U.S. autos. Ford rose 2%, and General Motors gained 2.9%.

Brown-Forman jumped 6.9% after the company behind Jack Daniel’s reported stronger profit for the latest quarter than analysts expected. Perhaps more importantly, CEO Lawson Whiting also said his company isn’t changing its forecasts for upcoming sales, even as “we anticipate continued uncertainty and headwinds in the external environment.”

U.S. whiskeys could be one of the products that get hit with retaliatory tariffs or at least a drop in demand from aggrieved customers in other countries.

In stock markets abroad, indexes rose across much of Asian and Europe.

Indexes rose 2.8% in Hong Kong, 1.2% in South Korea, and 1.8% in France.

German stocks rallied by 3% as the prospective partners in the country’s next government said they want to loosen rules on limiting debt to allow for higher defense spending, an issue that has gained urgency given the wavering U.S. commitment to European allies.

Stocks outside the United States have been doing better than the S&P 500, even with Trump’s America-First policies.

Source: https://apnews.com/article/stock-markets-rates-tariffs-trump-59d3601d30cce06043644c471a60e31d