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Key Takeaways
- The S&P 500 declined 0.3% on Thursday, March 27, after the White House announced a 25% tariff on car imports will take effect next week.
- After the tariff news, General Motors shares and those of other carmakers have fallen.
- However, the assumption that drivers might hold onto older vehicles for longer helped lift shares of auto parts retailers AutoZone and O'Reilly Automotive.
Investors are analyzing the implications of recent changes in trade policy.
President Donald Trump’s administration declared a 25% tariff on vehicles imported into the U.S. after markets closed Wednesday. After fluctuating for much of the day, the S&P 500 closed Thursday’s session 0.3% lower. The Dow industrials fell 0.4% while the Nasdaq, which is dominated by tech stocks, lost 0.5%.
Following the tariff news, shares of major carmakers fell. General Motors (GM) stock plunged 7.4%, falling the furthest of any S&P 500 constituent on Thursday. GM suffered a greater impact than its competitors because of the sheer number of vehicles the company imports. It also has a larger exposure to Mexico and South Korea. However, the other members of the “Big Three”—Ford (F) and Jeep manufacturer Stellantis (STLA)—also took a hit, with shares declining 3.9% and 1.1%, respectively.
Super Micro Computer (SMCI), a company whose shares have fallen 6.3% this week, is the latest in a series of losses that began after Goldman Sachs analysts lowered the stock’s rating to “sell” citing increased competition on the market for AI servers. Concerns about trade and tariffs have also contributed towards a broader pressure on AI related stocks.
United Airlines shares (UAL) fell 5.6% after Teamsters’ Union technicians rejected a carrier’s contract proposal. Reports claim that 99.5% of mechanics in unions who participated voted against this deal, which would outsource some of their work from the United States to China.
Dollar Tree (DLTR) shares soared 11.2%, notching the top daily performance in the S&P 500. The surge on Thursday extended gains from the previous session, after the discount retailer revealed a plan for selling its Family Dollar Brand. Analysts at JPMorgan raised their price target for the stock in order to reflect the expected benefits that Dollar Tree will experience as a stand-alone business. Analysts at UBS Securities said that the retailer’s slimmed down form is positioned to benefit from the consumers looking for value in an uncertain economic climate.
Investors weighed the impact of tariffs on imported vehicles and boosted shares of auto parts retailers. Sticker shock from tariffs could encourage motorists to hold on to their older vehicles longer, which will help parts providers drive sales. AutoZone’s (AZO’s) shares jumped a whopping 4.0%, while O’Reilly Automotive’s (ORLY’s) shares gained 3.1%.
Abbott Laboratories (ABT) received earlier-than-expected approval from European Union health regulators for its Volt Pulse Field Ablation (PFA) system, a device designed to treat patients with the heart rhythm disorder known as atrial fibrillation. Abbott can now begin commercializing the device in Europe. The company plans to expand its use during the second half of the year. Abbott shares increased 3.8% Thursday.
