Unsettling Wall Street as Trump tariff dispute moves to court
Wall Street Loses Momentum: Renewed Tariffs Uncertainty Hits Stock Market
A brief rally on Wall Street over the halt of President Trump's tariffs has been dampened as a federal appeals court reinstates the tariffs. Analysts had urged investors to remain cautious prior to the court decision. A meeting between Trump and Federal Reserve Chair Powell did not provoke a market response.
The trade policy of President Donald Trump has dominated the stock market's action. An earlier ruling by the US Court of International Trade deemed Trump's tariffs invalid. However, a federal appeals court reinstated the extensive tariffs in late trading, without offering an explanation. The US stock market reacted with minimal gains to these developments.
Market observers had previously advised investors not to get overly optimistic before the appeals court ruling. For most of the US's trading partners, the court's decision will have limited effect, according to Goldman Sachs. It pertains to some tariff increases, such as the base tariff of 10 percent and tariffs against countries like Canada, China, and Mexico, but not those affecting sectors like steel, aluminum, and auto imports, the analysts clarified.
The Dow Jones Index rose 0.3 percent to 42,216 points. The S&P-500 and the Nasdaq Composite both improved by 0.4 percent. Tech stocks received a boost from Nvidia. The AI-focused company reported surprisingly strong quarterly results and a positive outlook after market close the previous day. According to preliminary data, 1,866 stocks rose, while 865 fell on the NYSE. 91 stocks remained unchanged.
On the economic front, the number of initial jobless claims unexpectedly increased last week. The second reading of the first quarter's gross domestic product (GDP) showed a smaller contraction in the US economy than anticipated and previously reported. The personal consumption expenditures (PCE) price index, favored by the US central bank as an inflation measure, increased by 3.6 percent, following a rise of 2.4 percent in the previous quarter. The GDP data indicates that the US central bank will maintain interest rates at their current level for now, said Paul Stanley of Granite Bay. He expects the Federal Reserve to resume interest rate cuts in the fall.
The dollar initially gained in response to the court ruling, but then relinquished its gains following weak labor market data and turned negative. The Dollar Index fell by 0.5 percent. On the bond market, yields also receded following U.S. economic data, as investors sought "safe havens" due to economic uncertainty. The 10-year yield decreased by 5 basis points to 4.43 percent.
Gold also benefited from the search for safety, with the troy ounce gaining 1.0 percent to $3,316. Market participants cited ongoing uncertainty despite the tariff ruling.
Oil prices turned negative following the weak labor market data. Notations for Brent and WTI fell by up to 1.4 percent. Observers pointed to concerns about demand and noted that OPEC+ could increase its production in July. Meanwhile, U.S. weekly crude oil inventories dropped more than analysts had predicted.
Nvidia shares surged 3.2 percent following strong quarterly results. Nvidia relieved concerns about the impact of the Trump administration's chip sales ban to China. Shares of companies offering AI infrastructure, such as Super Micro Computer, also saw demand.
Salesforce.com reported better-than-expected results and raised its earnings guidance, but its stock fell 3.3 percent. RBC downgraded Salesforce to "Sector Perform". HP plummeted 8.3 percent after lowering its annual guidance.
Boeing shares (+3.3%) reached their highest level in 15 months. CEO Dave Calhoun hinted at the resumption of aircraft deliveries to China in June and indicated that the company was approaching a production rate of 38 737-Max aircraft per month.
For more on today's market activity, please see here.
Sources: ntv.de, mau/DJ
Wall StreetTariffsNvidiaBoeing
- The tariff policy of President Trump, as seen in the reinstatement of the tariffs by a federal appeals court, has significantly affected the stock market, causing the US stock market to react with minimal gains.
- Analysts are advising investors to be cautious with their investments, as the reinstated tariffs have caused uncertainty in the stock-market, particularly in the tech sector, where Nvidia and other AI-focused companies experienced both gains and losses.
- The employment policy, as indicated by the number of initial jobless claims, has shown unexpected increases, potentially impacting the general-news and politics landscape, as well as the overall financial health of the business community.
