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Trump's new series of tariffs on the auto industry (0:20). Energy executives wary of Trump trade policy (3:35). Copper prices hit another record high; gold poised to rise (4:25).
Transcript
Wall Street's major averages slumped in Wednesday's trade, ahead of the Trump Administration's new series of tariffs on the auto industry.
The tech-heavy Nasdaq Composite (COMP:IND) closed -2%, as traders remained averse to riskier Technology stocks. Every member of the Magnificent 7 retreated, led by NVIDIA (NVDA) -5.6% and Tesla (TSLA) -5.5% both down over 5.5%. The benchmark S&P 500 (SP500) closed -1.1%, while the Dow (DJI) closed -0.3%.
It was “a relatively brutal day for market participants,” Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha. “A lot of this pessimism seemed to be the result of uncertainty regarding the tariff situation that has embroiled the globe.”
President Donald Trump announced new tariffs on automobile imports on Wednesday. A 25% tariff will be imposed on all vehicles not manufactured in the United States, effective on April 2.
The tariffs will initially start at 2.5% and gradually increase to 25%. The tariffs will apply to both imported cars and foreign auto parts brought into the U.S.
While the Trump Administration wants to bring more manufacturing back into the U.S., analysts warn it could take years and tens of billions in capital to completely reorient the supply chain to North American production.
Detroit automakers and foreign automakers have been warning for weeks that tariffs could hurt the industry overall and lead to significantly higher car prices in the U.S. Wedbush Securities analyst Dan Ives put a number on the potential pain. "In our view, these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many U.S.) automakers and ultimately push the average price of cars up $5,000 to $10,000 depending on the make/model/price point," he wrote following the announcement.
RBC analyst Tom Narayan said the tariffs as set will be destructive to the auto industry and a potential disaster to the industry at the 25% level if it were to come to that.
Edmunds analyst Jessica Caldwell warned that many vehicle parts are sourced globally, which would increase repair costs for car owners, and reconditioning costs for dealers. "Insurance premiums will also likely increase as any accidents involving new parts will see increased costs as well," she noted.
Bank of America thinks negotiations could prevent a major auto industry chaos. "We continue to expect that rational economic arguments that protect and maximize US workers and companies will prevail. Ultimately, this would mean not too much disruption to the status quo, but the process to get there could be volatile," highlighted analyst John Murphy.
Tesla and South Korean automaker Hyundai (OTCPK:HYMTF) are seen better insulated from the broad tariff battle that is escalating. In terms of share price performance, Chinese EV makers XPeng (XPEV) and Li Auto (LI) are the top gainers in the auto sector this year amid the trade war headlines.
Crude oil futures climbed Wednesday, helped by U.S. government data showing an unexpected 3.3M-barrel weekly draw in domestic crude inventories and a fourth straight decline in gasoline stocks.
U.S. gasoline inventories extended their decline to four weeks, falling by 1.4M barrels to 239.1M barrels, and were 2% above the five-year average; gasoline stocks were forecast to have declined by 1.8M barrels.
U.S. oil and gas activity increased slightly in Q1, but energy company executives were wary of President Trump's trade policy and the effects on the energy sector, according to a new survey from the Dallas Fed.
Trump has pledged his intention to unleash U.S. energy dominance, but many executives surveyed by the Dallas Fed expressed worries about Trump's promise to drive down oil prices, and said his trade and tariff policies could raise drilling costs.
"In a strange twist to the administration's hope for more domestic oil and gas production, higher steel tariffs may result in fewer wells completed due to higher completion costs," one anonymous oilfield services exec said in the survey.
U.S. copper prices rallied to hit another record high Wednesday, as the mounting trade war between the U.S. and key trading partners threatens to squeeze supplies of the metal.
Analysts have been expecting a 25% copper tariff would be implemented between September and November, but Bloomberg has reported the tariff could come much sooner. (CPER), (COPX), (OTC:JJCTF).
Copper mining companies are gaining ground while the broader stock market has been slipping: Freeport-McMoRan (FCX) is up 9% and Southern Copper (SCCO) is 8% higher for the year.
The clamor has been so intense in recent weeks that traders have been offering as much as $500/ton on top of LME prices to get copper that can be delivered onto the Comex, Bloomberg reported.
Gold futures edged marginally higher Wednesday, as did the dollar and U.S. bond yields, but ongoing concerns over President Trump's tariffs kept prices above $3,000/oz. Gold is traditionally seen as a hedge against uncertainty and inflation, and has climbed 15% YTD.
The effect of the upcoming April 2 reciprocal tariffs on global growth underpin a bullish outlook on gold for the next three months, Citi analysts said, adding the market may be significantly underpricing the effects of the tariffs and that investors should take insurance against adverse outcomes.
Gold futures are poised to rise to $3,500/oz within the next two years, Bank of America said in a new report, while highlighting that uncertainty arising from U.S. trade policies will continue to lend support to prices in the near-term.
In other news from headlines around Seeking Alpha:
- OpenAI expects its revenue to more than triple in 2025 and reach $12.7B, according to a report by Bloomberg.
- FirstEnergy discloses workforce cuts as part of reorganization
- BP weighs selling stakes in two U.S. Gulf projects - Reuters
- CRISPR Therapeutics COO Julianne Bruno steps down.
- Worthington (WOR) surges to nine-month high after quarterly beat, positive tariff comments
And on today's calendar, look for Jobless Claims at 8:30 am.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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