Stock market turbulence amidst disputes surrounding Trump's trade taxes
Wall Street Trembles Amid Uncertainty Over Trump's Tariffs
The buoyant spirit on Wall Street, brought about by the halt of President Trump's tariffs, was short-lived as a federal appeals court reinstated them, without issuing an explanation. Analysts had cautioned investors not to get overly optimistic. A meeting between Trump and Federal Reserve Chair Powell yielded no response.
The tariff ruling by the US Court of International Trade declared Trump's imposed tariffs as invalid. However, the federal appeals court subsequently reinstated the extensive tariffs in late trading. The US stock market reacted with a minimal gain to these developments.
Market observers had already advised investors not to get overly excited before the appeals court's ruling. For most of the US's trading partners, the ruling will make minimal difference, according to Goldman Sachs. It only affected some tariff increases, such as the base tariff of 10% and those against countries like Canada, China, and Mexico, but not tariffs targeting sectors like steel, aluminum, and auto imports, analysts noted.
The Dow Jones Industrial Average gained 0.3% to 42,216 points. The S&P 500 and the Nasdaq Composite each improved by 0.4%. Tech stocks received a boost from Nvidia, which had surprisingly strong quarterly results and a positive outlook after the market close the previous day. Preliminary figures showed 1,866 gainers and 865 losers on the NYSE, with 91 stocks remaining unchanged.
On the economic front, the number of initial jobless claims rose unexpectedly last week. The second reading of the first quarter's Gross Domestic Product showed a smaller contraction in the US economy than expected and previously reported. The personal consumption expenditures price index, favored by the US central bank as an inflation measure, rose by 3.6% after a 2.4% increase in the prior quarter. This GDP data suggests that the US central bank will maintain interest rates at their current level for now, according to Paul Stanley of Granite Bay. He expects the Federal Reserve to resume interest rate cuts in the fall.
The dollar initially appreciated in response to the court ruling but later relinquished its gains following weak labor market data and turned negative. The Dollar Index dropped by 0.5%. On the bond market, yields also retreated following US economic data, as investors sought "safe havens" due to economic uncertainty. The 10-year yield fell by 5 basis points to 4.43%.
Gold also benefited from the search for safety, with the troy ounce rising 1.0% to $3,316. Market participants attributed this increase to ongoing uncertainty despite the tariff ruling.
Oil prices slumped after the weak labor market data. Notations for Brent and WTI fell by up to 1.4%. Observations suggested concerns about demand and highlighted the possibility of Opec+ increasing its production in July. Meanwhile, US weekly crude oil inventories declined more than analysts had anticipated.
Nvidia shares surged 3.2% following the company reporting strong first-quarter results, easing 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.
Salesforce.com also reported better-than-expected results and raised earnings guidance, but its stock fell 3.3%. RBC downgraded Salesforce to "Sector Perform." HP plummeted 8.3% after lowering its annual guidance.
Boeing shares (+3.3%) hit their highest level in 15 months. CEO Dave Calhoun hinted that aircraft deliveries to China could resume in June and that the company was nearing a production rate of 38 737-Max aircraft per month.
Sources: ntv.de, mau/DJ
Keywords: Wall Street, Tariffs, Nvidia, Boeing
Community policy discussions might ensue regarding the continued implementation of Trump's tariffs, influencing employment policy decisions for various industries. In the realm of business and politics, this uncertainty, as seen with Wall Street's recent volatile response, could impact financing options, particularly for sectors heavily dependent on international trade, like technology and automotive, as suggested by Goldman Sachs. General-news outlets continue to monitor these ongoing developments.
