Stock Market Pushes Forward, Bolstered by Reduction Anticipation
Wall Street Witnesses Mixed Reactions to Trump's Trade Policies and Inflation
As the trading week wraps up, Wall Street displays a positive trend, fueled by signs of easing US-China trade dispute tensions. However, economic data suggests Trump's trade policies might be triggering inflation.
Stock Market Stats- Dow-Jones Index: Closed 0.8 percent higher at 42,655 points- S&P-500: Advanced by 0.7 percent- Nasdaq Composite: Saw a 0.5 percent increase
Throughout the day, 1,916 stocks gained, while 831 declined, with 61 remaining unchanged. Ten-year note yields dipped by 2 basis points, landing at 4.44 percent.
The Economy: A Mixed Bag
The US government is preparing for talks with the European Union regarding agricultural tariffs and other trade barriers. These discussions will also touch upon economic security and digitalization issues. Optimism among investors persists, as Alexandra Wilson-Elizondo of Goldman Sachs firmly believes that the trade issue may take a backseat for the next 90 days, causing focus to shift towards budget, tax, and deregulation matters.
Inflationary Pressures Intensify
US import prices soared more than expected in April, indicating the direct impact of Trump's tariffs, primarily those imposed on Chinese goods. Economists had anticipated a 0.4 percent drop due to lower oil prices, but these failed to offset the price hike. This evidence points to strong inflationary pressure resulting from the tariffs.
Housing starts fell less than projected in April, and the University of Michigan's consumer sentiment index dropped unexpectedly. Furthermore, the survey unveiled high inflation expectations, which could lead to hesitation when purchasing and forward-buying effects instead of long-term purchasing intentions.
Boeing Struggles to Impress
Despite Etihad Airways ordering 28 wide-body aircraft from Boeing, the company still lost 0.2 percent. Critics note Boeing's lack of production as the reason for the persistent downturn, as aircraft orders won't enter service until the end of the decade. Observers have also highlighted Boeing's slow recovery from the plunge in production post-2019's 737 MAX crashes, the Covid pandemic, and the subsequent Alaska Airlines incident in January 2024.
Two Powerhouses Merge
Two of the largest cable and broadband providers in the US, Charter Communications and Cox Communications, are set to merge in a $21.9 billion deal. In this transaction, Cox is valued at $34.5 billion, including debt. Charter Communications shares jumped 1.8 percent following the merger announcement.
Applied Materials and Take-Two Interactive Fall Short- Applied Materials: Missed revenue estimates in the second quarter but managed to beat earnings expectations.- Take-Two Interactive: Reported mixed results for the fourth quarter, with revenues meeting expectations but earnings missing the mark. The company's outlook for the current fiscal year fell short of market expectations.
Currency and Oil Market Fluctuations
The dollar recovered slightly, with the Dollar Index up by 0.2 percent. Concerns about inflation and the potential for rate cuts by the US Federal Reserve continue to weigh on the dollar.
Oil prices bounced back slightly after a drop the previous day. Persistent worries about Opec+ production cuts and the possibility of an Iran deal remain a drag on the oil market. Discussions regarding additional Iranian supplies, combined with market expectations of oversupply, could put further downward pressure on oil prices.
[1] Source: ntv.de, mau/DJ
- Trade disputes
- Inflation
- US stock market
- Economic growth
- Tariffs
- Boeing
- Mergers
- Oil prices
- Dollar index
- Despite the positive trend in the US stock market, with the Dow-Jones Index, S&P-500, and Nasdaq Composite all seeing increases, concerns about inflationary pressures intensifying, as a result of Trump's tariff policies, have emerged, impacting investor confidence.
- As the US government prepares for talks with the European Union, discussions will not only focus on agricultural tariffs and other trade barriers but also on economic security and digitalization issues. This shift in focus towards budget, tax, and deregulation matters, as proposed by Alexandra Wilson-Elizondo of Goldman Sachs, could have implications for employment policy and finance within the business community.
