Stocks climb as Trump to delay some auto tariffs; euro up

By Caroline Valetkevitch

NEW YORK (Reuters) - Stock indexes rose sharply on Wednesday after the White House said President Donald Trump will exempt automakers from his 25% tariffs on Canada and Mexico for one month, while the U.S. dollar fell against most currencies and the euro hit its highest in four months.

The automakers will be exempted as long as they comply with an existing free trade agreement, the White House said, noting that Trump is also open to hearing about other products that should be exempted from the tariffs, which took effect on Tuesday.

The new 25% tariffs on imports from Mexico and Canada were imposed along with fresh duties on Chinese goods, sparking trade wars that fueled worries about economic growth.

Stocks were volatile near flat in early trading before turning sharply higher by the afternoon.

"It's not a very consistent message that comes from the administration in the sense that they always seem open to changes, and yet the policies they're announcing are pretty dramatic," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Investors took comfort in Trump's commitment to cutting taxes in a major address to Congress late on Tuesday, but voiced concerns about his continued focus on tariffs and other plans.

The Dow Jones Industrial Average rose 485.60 points, or 1.14%, to 43,006.59, the S&P 500 rose 64.48 points, or 1.12%, to 5,842.63 and the Nasdaq Composite rose 267.57 points, or 1.46%, to 18,552.73.

MSCI's gauge of stocks across the globe rose 12.57 points, or 1.49%, to 858.71. The pan-European STOXX 600 index rose 0.91%.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 1.19% to 104.31, with the euro up 1.55% at $1.0789.

The euro was on track for its best week since November 2022. It got a boost late Tuesday when German political parties agreed to a 500 billion-euro ($534.75 billion) infrastructure fund and, crucially, an overhaul in borrowing limits that economists billed as "a really big bazooka".

The euro also gained against other currencies, including the British pound, the Japanese yen and the Swiss franc.

The overhaul to German government borrowing also triggered the biggest sell-off in the country's debt since the late 1990s. Germany's 10-year yield was last up 1.6 basis points at 2.8%.

U.S. Treasury yields climbed as investors assessed the latest U.S. economic data while weighing developments on Trump's tariffs.

Yields initially dipped after the ADP National Employment Report showed private payrolls increased by only 77,000 jobs last month, well short of the 140,000 estimate of economists polled by Reuters, after an upwardly revised 186,000 gain in January.

A string of data has raised concerns about a slowing economy and nudged up market expectations for the timing and size of interest rate cuts by the Federal Reserve this year.

The benchmark U.S. 10-year Treasury note yield rose 5.9 basis points to 4.269% after reaching 4.284%, its highest since February 27.

Investors also scrutinized the start of China's annual sessions of its parliament, the National People's Congress, at which Beijing retained a goal of roughly 5% economic growth for 2025.

The dollar weakened 0.22% to 7.236 versus the offshore Chinese yuan.

Oil prices ended lower after U.S. crude oil stockpiles posted a larger-than-expected build, adding to other headwinds.

Brent futures settled down $1.74, or 2.45% to $69.30 a barrel. U.S. West Texas Intermediate crude (WTI) settled down $1.95, or 2.86%, to $66.31 a barrel.

(Reporting by Caroline Valetkevitch; additional reporting by Amanda Cooper in London and Kevin Buckland in Tokyo; Editing by Richard Chang, Nick Zieminski and Daniel Wallis)