Stocks down, gold hits record after Trump's latest tariff volley

By Chuck Mikolajczak

NEW YORK (Reuters) -Global stocks fell for a second straight session and gold hit a record high on Thursday after the latest tariffs from U.S. President Donald Trump's administration that expanded the trade war to autos.

Trump on Wednesday announced 25% tariffs on vehicles and foreign-made auto parts imported into the United States. This weighed on Japan's Nikkei and South Korea's KOSPI.

Countries around the globe threatened retaliatory levies.

U.S. stocks oscillated between gains and losses while automakers slumped, although electric vehicle makers Tesla and Rivian climbed as their production is located within the U.S.

General Motors tumbled 7.36%, while Ford lost 3.88%, reflecting concerns about the impact on their supply chains. U.S.-listed shares of Stellantis dipped 1.25%.

"Investors are really cautious and wary of Trump and his policies. Even more than the policies, just the constant flip-flopping," said Jed Ellerbroek, a portfolio manager at Argent Capital in St. Louis, Missouri.

"That makes people really nervous to make long-term investment decisions, whether we're talking about companies or about investors."

The Dow Jones Industrial Average fell 155.09 points, or 0.37%, to 42,299.70, the S&P 500 fell 18.89 points, or 0.33%, to 5,693.31 and the Nasdaq Composite fell 94.98 points, or 0.53%, to 17,804.03.

The major U.S. indexes are on track for their first back-to-back monthly declines since the two-month period that ended in October 2023.

European stocks closed lower, with weakness in shares of the continent's top carmakers. Volkswagen was down 1.26%, BMW was off 2.55% and Mercedes-Benz was 2.69% lower.

MSCI's gauge of stocks across the globe fell 2.77 points, or 0.33%, to 843.19.

The pan-European STOXX 600 index fell 0.44% to 546.31, a two-week closing low.

Tariffs and their effect on the global economy, as well as their potential to delay Federal Reserve rate cuts, have weighed on stocks in recent weeks, though shares have shown signs of stabilizing lately.

Reflecting investors' caution, spot gold was 1.26% higher at $3,057.35 an ounce, after hitting a record $3,059.30.

Goldman Sachs raised its gold price forecast on Wednesday to $3,300, citing stronger-than-expected exchange-traded fund inflows and sustained central bank demand.

The dollar index, which measures the greenback against a basket of currencies, dipped 0.33% to 104.29, with the euro up 0.4% at $1.0795.

Versus the dollar, the Mexican peso weakened 0.86% to 20.295 while the Canadian dollar softened 0.29% to C$1.43 as both countries are expected to be heavily impacted by the auto tariffs.

Trump has announced plans to impose reciprocal tariffs on all countries on April 2.

Canadian Prime Minister Mark Carney said on Thursday he would respond with unspecified trade actions if Trump imposes the new auto tariffs.

U.S. data showed the labor market remains on solid footing, although the impact of Trump's tariff policy and the aggressive cutting of federal workers by billionaire Elon Musk's Department of Government Efficiency has yet to show an outsized impact.

Other data showed the economy grew at a slightly more solid pace in the fourth quarter than previously estimated.

The benchmark U.S. 10-year Treasury note yield rose 2.7 basis points to 4.365%. While the yield on the seven-year note was higher after a soft auction of $44 billion of the paper.

U.S. crude settled 0.39% higher at $69.92 a barrel and Brent settled at $74.03 per barrel, up 0.33% on the day, as investors assessed the ramifications of the latest escalation in the trade war.

(Reporting by Chuck Mikolajczak; Additional reporting by Karen Brettell in New York, Noel Randewich in San Francisco, Pranav Kashyap and Johann M Cherian in Bangalore; Editing by Richard Chang, Kirsten Donovan and Rod Nickel)