Stocks rebound on tariff guesses

Stocks erased deep losses as White House officials left open the possibility that President Donald Trump’s tariff proposals will spare neighbors from the most severe penalties. The dollar and Treasuries erased gains.

The S&P 500 Index ended the day little changed after falling as much as 1 percent during a session marked by thin trading. Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers Chairman Kevin Hassett that indicated the trade policy is not yet finalized.

Trade angst still set the tone in U.S. equities, with multinationals in the Dow Jones Industrial Average leading declines, while domestically focused small caps paced gains. Treasuries pared an advance to trade little changed, while Bloomberg’s dollar index fell versus the Canadian dollar after White House spokesperson Sarah Sanders said “there are potential carve outs” for the northern nation in the coming tariffs.

Elsewhere, crude fell toward $61 a barrel in New York. Investors also have their sights fixed on upcoming central bank decisions in Europe and Japan, ahead of Friday’s U.S. jobs report.

“I think markets are taking a wait and see attitude. But I do believe markets will selloff a lot more if it becomes clear that we are going to start tariffs.” Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, said by phone.

While the imposition of severe levies on steel and aluminum may come as soon as this week, speculation remains that the tariffs may not spark a broader trade conflagration. The European Union has said it will retaliate in kind, while China has so far remained largely quiet. At the same time, Republican leaders in Congress have urged Trump to target only specific items and countries, adding to hope that a broader crackdown on trade will be avoided.