Market turbulence brews as court clashes over Trump's trade policies intensify on Wall Street
Wall Street Tumbles Amid Trump's Tariff Legal Battle
A flicker of optimism on the stock market after the halt of President Trump's tariffs has dimmed as a federal appeals court reinstated them. Analysts had urged caution, advising investors not to celebrate prematurely. A meeting between Trump and Federal Reserve Chair Powell yielded no notable reaction.
The US court's decision to invalidate Trump's tariffs was initially welcomed. However, the federal appeals court later reinstated the comprehensive tariffs, leaving the market with a minor gain. The ruling will have minimal impact on trading partners like China, according to Goldman Sachs, focusing on certain tariff increases, such as the base tariff of 10 percent and tariffs against countries like Canada, Mexico, and China, but not sectors like steel, aluminum, and auto imports.
The Dow Jones Index inched up 0.3 percent to 42,216 points. The S&P-500 and the Nasdaq Composite each increased by 0.4 percent. Tech stocks received a boost from Nvidia, buoyed by surprisingly strong quarterly results and an optimistic outlook. The NYSE showed 1,866 advancers versus 865 decliners, with 91 stocks remaining unchanged.
On the economic front, preliminary data indicated a larger contraction in the US economy than expected and previously reported. The personal consumption expenditures (PCE) price index, preferred by the US central bank as an inflation measure, rose by 3.6 percent, up from a 2.4 percent increase in the previous quarter. These figures lead analysts to suspect that the US central bank will keep interest rates at their current level for now, with a potential resumption of interest rate cuts in the fall.
The dollar initially appreciated in response to the court ruling but later relinquished its gains following weak employment data, turning negative. The Dollar Index declined by 0.5 percent. On the bond market, yields retreated following U.S. economic data, with investors seeking "safe havens" due to lingering economic uncertainty. The 10-year yield fell by 5 basis points to 4.43 percent.
Gold benefited from the hunt for safety, with the troy ounce gaining 1.0 percent. Ongoing uncertainty, despite the tariff ruling, contributed to the demand for the precious metal. Oil prices turned negative after the weak employment data, with notations for Brent and WTI dropping by up to 1.4 percent. Concerns about demand and an increase in production by OPEC+ in July were cited as factors.
Nvidia shares soared 3.2 percent on the back of strong first-quarter results, allaying concerns about the impact of the Trump administration's chip sales ban to China. Shares of AI infrastructure companies like Super Micro Computer were also in demand. While Salesforce.com reported better-than-expected results and raised its earnings guidance, it saw its stock fall 3.3 percent due to a downgrade by RBC to "Sector Perform." HP plummeted 8.3 percent after lowering its annual guidance.
Boeing shares rose 3.3 percent, hitting their highest level in 15 months, as CEO Dave Calhoun implied aircraft deliveries to China could resume in June and that the company was nearing a production rate of 38 737-Max aircraft per month.
For more on today's market activity, see here.
Sources: ntv.de, mau/DJ
The US court's reinstatement of comprehensive tariffs could potentially impact the US-China trade relations and create uncertainty for businesses closely involved, such as those dealing with auto imports, steel, and aluminum. In light of these economic uncertainties, forming a clear employment policy and adhering to the community policy becomes crucial for maintaining stability in the employment sector. Investors might consider diversifying their portfolios to include sectors resilient to tariff changes, as well as businesses with strong financial management strategies, since market fluctuations can challenge ongoing business operations.
