Trade tussle involving Trump's tariffs ruffles feathers on Wall Street
Updated Article
The U.S. stock market confronts new uncertainties following the federal appeals court's decision to restore President Trump's tariffs. Initially, the US Court of International Trade invalidated Trump's imposed tariffs. However, this ruling was overturned late in trading by the federal appeals court, without offering an explanation.
The ruling’s impact on the stock market was anticipated by market observers, who had advised investors against excessive optimism. The reinstated tariffs primarily affected the base tariff of 10 percent, as well as tariffs against countries like Canada, China, and Mexico, but not those affecting sectors such as steel, aluminum, and auto imports, according to Goldman Sachs.
The Dow Jones Index ascended 0.3 percent, reaching 42,216 points. The S&P-500 and the Nasdaq Composite improved by 0.4 percent each. The tech-focused Nasdaq Composite received a boost from Nvidia, which posted surprisingly robust quarterly results and an optimistic outlook, following the market's close the previous day.
On the economic front, jobless claims unexpectedly increased last week, while the second reading of the first quarter’s Gross Domestic Product (GDP) showed a smaller contraction in the U.S. economy than anticipated. The personal consumption expenditures (PCE) price index, favored by the U.S. central bank as an inflation measure, climbed by 3.6 percent. The GDP data suggests that the U.S. central bank will keep interest rates steady for the time being, according to Paul Stanley of Granite Bay. He expects the Federal Reserve to recommence interest rate cuts in the fall.
The dollar initially appreciated as a result of the court ruling, but soon relinquished its gains due to weak labor market data and economy-related concerns. The Dollar Index declined by 0.5 percent. In the bond market, yields retreated after U.S. economic data, as investors sought "safe havens" due to economic uncertainties. The 10-year yield dropped by 5 basis points to 4.43 percent. Gold also experienced a 1.0 percent surge in value due to its status as a safe asset in economically uncertain times.
On the oil market, prices turned negative after the weak labor market data. Notations for Brent and WTI declined by up to 1.4 percent. Concerns about demand and the potential for the OPEC+ alliance to increase production in July contributed to the negative trend. Meanwhile, U.S. weekly crude oil inventories decreased more than anticipated.
Nvidia shares rose 3.2 percent following the company's impressive first-quarter results, which assuaged concerns about the impact of the Trump administration's chip sales ban to China. AI infrastructure providers like Super Micro Computer also experienced increased demand. Despite reporting better-than-expected results and raising its earnings guidance, Salesforce.com's stock fell 3.3 percent. RBC downgraded Salesforce to "Sector Perform." HP plummeted 8.3 percent after reducing its annual guidance.
The Boeing stock edged up 3.3 percent, marking a 15-month peak. CEO Dave Calhoun hinted that the company might resume aircraft deliveries to China in June and approach a production rate of 38 737-Max aircraft per month.
For further insights on today's market activity, please see here.
Wall Street, Tariffs, Nvidia, Boeing
- The federal appeals court's decision to reinstate President Trump's tariffs could potentially influence the community policy of various businesses, especially those heavily invested in the employment sector, considering the impact of tariffs on their operations and profitability in the stock-market.
- In light of the unexpected increase in jobless claims and the GDP contraction, investors might reevaluate their approach towards employment policy within their businesses, possibly seeking more financial stability to weather economic uncertainties and maintain a competitive edge in the stock-market.
