Small-company stocks hold up well, but banks weaken

Tariffs weigh heavily on the auto industry

NEW YORK» Trade issues again weighed on the market Thursday as representatives of the auto industry told Congress they opposed tariffs on imported cars and car parts being proposed by the Trump administration. Banks and other large U.S. stocks fell, but smaller and more domestically-focused companies climbed.

Aluminum producers sank after Alcoa said the U.S. tariffs on imported aluminum are costing it $12 million to $14 mil- lion a month. The tariffs took effect June 1, and Alcoa is one of the first companies to say how much its business is being hurt by the taxes.

The U.S. imported $335 billion in autos and parts in 2017, so tariffs on those items could dwarf the taxes the administration has placed on imported steel, aluminum, and goods from China, although Trump has also threatened to put tariffs on a much larger portion of Chinese imports.

General Motors and Daimler have warned that tariffs could have major effects on their businesses. Lindsey Bell, investment strategist with CFRA, said most consumers haven’t noticed the effects of the tariffs yet, but that will change if cars are taxed.

“It will significantly increase the price of a car and the consumer will definitely pull back” on spending, she said, adding that foreign automakers with factories in the U.S. might move those jobs overseas.

“There’s a lot of jobs that could be lost if these tariffs go through,” she said.

Companies that make and distribute drugs fell after the Trump administration proposed changes to government rules on drug price rebates.

Major banks fell as interest rates decreased. Weak secondquarter results also weighed on American Express and Bank of New York Mellon. President Donald Trump told CNBC he is “not happy” the Federal Reserve has been raising interest rates, which had little effect on the stock market but did send bond yields and the dollar slightly lower.

The S&P 500 index slid 11.13 points, or 0.4 percent, to 2,804.49. The Dow Jones Industrial Average fell 134.79 points, or 0.5 percent, to 25,064.50. The Nasdaq composite gave up 29.15 points, or 0.4 percent, to 7,825.30.

The Russell 2000 index of smaller-company stocks rose 9.44 points, or 0.6 percent, to 1,701.31. Smaller companies tend to do better than larger ones when trade tension flares because they do a greater proportion of their sales in the U.S.