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Stock Markets Bullish on Potential Tariff Reduction

Rising Prices Spark Worry Among Consumers

Excitement and hopefulness are dominating Wall Street at present.
Excitement and hopefulness are dominating Wall Street at present.

Wall Street Fluctuates: Inflation Worries and Trade Hopes

Stock Markets Bullish on Potential Tariff Reduction

As the week draws to a close, Wall Street saw a mix of optimism and concerns. Positive signals of easing tensions in the US-China trade dispute fueled a rally on the stock market, although economic indicators revealed that the tariff policy initiated by President Trump could drive up inflation.

Stock Markets in the Green

US stock markets closed the week on a positive note, with gains on the last trading day. Trade disputes appeared to be easing, providing support to prices. The Dow Jones Index closed 0.8% higher at 42,655 points, while the S&P 500 and the Nasdaq Composite advanced by 0.7% and 0.5%, respectively. A total of 1,916 stocks advanced, 831 declined, and 61 remained unchanged on the NYSE. The yield on 10-year notes dropped 2 basis points to 4.44%.

Trade Disputes and Economic Indicators

Trade disputes remain a significant factor in the market. It's been reported that upcoming trade talks between the US and EU will focus on agricultural tariffs and other trade barriers, as well as economic security and digitalization. Despite these ongoing issues, some investors show signs of optimism. According to Alexandra Wilson-Elizondo of Goldman Sachs, the strong first-quarter earnings season and easing tensions in the US-China trade dispute have boosted investor confidence.

Inflationary Pressure and Imports

US import prices rose more than expected in April, signaling inflationary pressure from Trump's tariffs, particularly against China. Although lower oil prices had been expected to dampen the impact, they were not enough to offset the price increase. This development represents strong inflationary pressure from the tariffs, according to traders.

The University of Michigan's consumer sentiment index unexpectedly fell, with high inflation expectations adding to concern about the inflationary impact of Trump's tariffs. This typically leads to purchase hesitation or forward buying, rather than long-term purchase intentions.

A Mixed Bag for Companies

Boeing lost 0.2 percent despite securing an order for 28 wide-body aircraft from Etihad Airways. However, the new aircraft are not expected to enter service until the end of the decade. Some critics argue that Boeing has not produced enough aircraft since the plunge in production following the crashes of two 737 MAX aircraft in 2019, the start of the Covid pandemic, and the incident in January 2024 involving an Alaska Airlines Boeing aircraft losing an emergency exit door.

The merger of two of the largest cable and broadband providers in the US, Charter Communications and Cox Communications, was finalized for $21.9 billion. Charter Communications shares gained 1.8 percent as a result.

Applied Materials and Take-Two Interactive reported mixed results for their respective quarters, with Applied Materials missing revenue expectations, and Take-Two Interactive's guidance for the current fiscal year falling short of market expectations.

Dollar Stabilizes and Oil Prices Recover

The dollar slightly recovered, with the Dollar Index gaining 0.2 percent. Higher import prices and inflation expectations weighed against further rate cuts by the U.S. Federal Reserve. Oil prices bounced back after briefly dropping, with concerns about OPEC+ production cuts and a potential Iran deal remains.

For more on today's market activity, visit here.

Keywords: Wall Street, Tariffs, Inflation, Trade conflicts

  1. The financial and business sectors are closely monitoring the ongoing discussion in politics about community policies, as the tariff policy, particularly the employment policy related to trading, could impact inflation and general-news, such as the trade conflicts with countries like China and the EU.
  2. Amid the optimism on Wall Street due to the easing tensions in US-China trade disputes, some companies like Boeing are grappling with the impact of the employment policy regarding tariffs on their business operations, as high inflation expectations and the inflationary pressure from these policies could affect their performance and consumer sentiments.

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