Wall Street is experiencing profit increases while Nvidia's figures are declining.
Wall Street's focus shifted to tariff-related uncertainty on Wednesday, with the Dow-Jones dipping 0.4% to 43,433 points. Initial optimism over tariff negotiations with Canada and Mexico was soon dampened by President Trump's announcement that the tariffs would go into effect on April 2, and threats of 25% tariffs on EU imports.
The S&P-500 managed to hold its ground, while the Nasdaq Composite gained a modest 0.3%. The only economic update of the day, January's new home sales data, showed a significant drop, adding to concerns about the cooling US economy.
Investor nerves were tested by tech sector's high valuations and Trump's new limitations on Chinese investments. However, Nvidia's release of its fourth-quarter figures sparked hope in the tech sector, with the stock gaining 3.7% after three consecutive days of decline. The tech-heavy Nasdaq Composite is closely watching Nvidia's outlook to gauge AI industry growth.
Fragmented reports on individual stocks marked the day, with Super Micro Computer shares surging 12.2% following its Q4 report submission and SEC filing, and Lucid shares plummeting 13.6% due to leadership changes and production projections.
Meanwhile, gold prices retreated due to profit-taking, while bond yields remained low, with Morgan Stanley seeing a limited US bond rally unless there's a significant change in Federal Reserve rate cut expectations.
Tariff-Related Impact
Recent tariffs have brought market volatility. A 5% decrease in S&P 500's fair value and a 2-3% EPS decline are estimated by Goldman Sachs analysts. Indices have shown varied performances, with US value stocks rising 0.2% despite growth stocks' 1.8% decline.
The energy sector has been impacted, with Chevron's stock price dropping due to tariff-related refining challenges. The AI sector is also affected, with companies like Nvidia and Microsoft facing uncertainty due to global competition and emerging technologies.
Regarding the broader economy, tariffs could slow U.S. economic growth by up to 1%, and S&P 500's earnings growth could decrease by about 2.5%. Supply chain disruptions are also a concern for companies like TSMC and ASML Holding.
This ever-shifting market landscape calls for agile investment strategies and solid risk management.
Jones, an analyst at a prominent investment firm, expressed his concerns about the tariff-related uncertainty affecting The Wall Street in 2024. He noted that the ongoing tariffs could lead to barometers like the S&P-500 and Dow-Jones experiencing further volatility, with potential decreases in fair value and earnings growth. The tariffs, he argued, could also impact specific sectors, such as the energy sector with companies like Chevron facing challenges, and the AI sector with companies like Nvidia and Microsoft facing uncertainty due to global competition and emerging technologies.
