North American stock markets are gaining ground Wednesday as the U.S. softens its position on some tariffs against several key trading partners.

The shift comes a day after a sharp tumble that wiped out the last of the “Trump bump” that Wall Street received following the presidential election in November.

In Toronto, the S&P/TSX composite index was up 1.01%, or 248.84, 24,825.41 at 2:13 p.m. ET after falling as low as 24,548.99 earlier in the session.

The S&P 500 rose 0.5% in afternoon trading after losing 6% since setting its all-time high last month and returning to where it was before President Donald Trump’s election. The Dow Jones Industrial Average was up 228 points, or 0.5%, and the Nasdaq composite rose 0.7%.

President Donald Trump is granting a one-month exemption on his new tariffs on imports from Mexico and Canada for U.S. automakers, amid fears that the trade war could harm U.S. manufacturers. The broader tariffs implemented on Tuesday caused the United States’ largest trading partners to retaliate with their own tariffs, raising the risk of a punishing trade war that hurts the economies of all involved.

Economists say such tariffs could not only increase bills for U.S. households but also gum up global trade and slow the economy. That’s raising the possibility of a worst-case scenario known as “stagflation.” It’s something that doesn’t happen often, where the economy is stagnating and inflation is high, and policy makers at the Federal Reserve don’t have a good tool to fix it.

The rise of worries about stagflation has sent U.S. stocks sharply lower recently, eliminating gains that erupted after Election Day on hopes that Trump would lessen regulations on businesses, cut taxes and make other moves that would strengthen corporate profits and the overall economy.

For his part, Trump said in an address before Congress Tuesday night that he’s going ahead with tariffs, with more on track to go into effect on April 2, even if they cause “a disturbance.”

“Tariffs are about making America rich again and making America great again,” he said. “And it’s happening and it will happen rather quickly. There will be a little disturbance, but we’re OK with that.”

U.S. businesses and households, though, have been sending signals they’re worried. U.S. consumers are bracing for higher inflation because of the possibility of tariffs, and their confidence has soured sharply. Businesses, meanwhile, are struggling to keep up with all the changes coming from Washington, and U.S. manufacturers said their growth is approaching stall-speed amid worries about tariffs.

A couple reports on Wednesday gave a mixed read on the U.S. economy’s strength. One suggested U.S. employers pulled back on their hiring sharply last month and added fewer workers than economists expected. The report from ADP could be a warning signal ahead of the more comprehensive jobs report that’s coming Friday from the U.S. Labor Department.

But a separate report said growth for U.S. finance, real estate and other businesses in the services sector is better than economists expected. Even though businesses said in the survey they’re confronting “chaos” and uncertainty because of tariffs, their growth accelerated last month, according to the Institute for Supply Management.

“The economic impact and consumer impact is still ahead of us,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. “It comes back to what no one really knows, and that is how long these tariffs stay in place.”

Treasury yields turned higher in the bond market, and the yield on the 10-year Treasury rose to 4.27% following the report on U.S. services businesses from 4.18% just before. That helped it recover some of its sharp slide since January, when it was approaching 4.80%, after worries about the economy’s growth weighed on yields.

The Federal Reserve may offer more clues when it releases what’s called the Beige Book in the afternoon. It collects anecdotes from businesses around the country, describing what they’re seeing at the local level.

The U.S. economy closed out last year running at a solid pace. If it were to weaken sharply, the Fed could cut its main interest rate in hopes of making borrowing easier and goosing the economy. But such moves typically also put upward pressure on inflation. If prices for eggs and other everyday items are rising because of tariffs, that could box in the Fed.

On Wall Street, automakers rose amid hopes that Trump may temper his tariffs on Mexico and Canada, which are integral to the production of many U.S. autos. Ford rose 4.4%, and General Motors gained 5.6%.

Brown-Forman jumped 9.6% after the company behind Jack Daniel’s reported stronger profit for the latest quarter than analysts expected. Perhaps more importantly, CEO Lawson Whiting also said his company isn’t changing its forecasts for upcoming sales, even as “we anticipate continued uncertainty and headwinds in the external environment.”

U.S. whiskeys could be one of the products that get hit with retaliatory tariffs, or at least a drop in demand from aggrieved customers in other countries.

On the losing end of Wall Street was Campbells. The food company fell 2.4% after cutting some of its financial forecasts, citing discouraging trends for its snack products

In stock markets abroad, indexes rose across much of Asian and Europe.

Indexes rose 2.8% in Hong Kong, 1.2% in South Korea, and 1.6% in France.

Germany stocks rallied by 3.4% as the prospective partners in the country’s next government said they want to loosen rules on limiting debt to allow for higher defense spending, an issue that has gained urgency given the wavering U.S. commitment to European allies.

Stocks outside the United States have been doing better than the S&P 500, even with Trump’s America-First policies.

Reuters and The Associated Press