Stock market stirs due to ongoing court dispute concerning Trump import taxes
Market Reacts As Appellate Court Reinstates Trump's Tariffs
In a sudden turn of events, a federal appellate court reinstated the extensive tariffs imposed by President Donald Trump, sending a wave of uncertainty across Wall Street. The US stock market experienced a slight uptick in response to this development.
The tariff saga has been a significant factor in Wall Street's activities, with analysts urging investors not to get carried away by the initial cheer on the stock exchanges following the US Court of International Trade's declaration of the tariffs as invalid. For most of the US's trading partners, the reinstated tariffs will have minimal impact, according to Goldman Sachs. The ruling affects only some tariff increases, specifically the base tariff of 10 percent and retaliatory tariffs against countries like Canada, China, and Mexico, while leaving untouched those imposed on sectors such as steel, aluminum, and auto imports.
The Dow-Jones Index gained 0.3 percent to 42,216 points, while the S&P-500 and the Nasdaq Composite each improved by 0.4 percent. Tech stocks received a boost, partly thanks to Nvidia's surprisingly strong quarterly results and positive outlook. Preliminary data from the NYSE showed 1,866 gainers and 865 losers.
In a meeting between President Trump and Fed Chairman Jerome Powell, there was no response to trigger market reactions. According to a Fed statement, Powell did not discuss his expectations for monetary policy. The White House spokeswoman, Karoline Leavitt, reported that the President believed Powell was making a mistake by not lowering interest rates, which, he claimed, puts the US at an economic disadvantage compared to China and other countries.
The number of initial jobless claims unexpectedly rose last week, while the second reading of the first quarter's Gross Domestic Product (GDP) showed a smaller contraction in the US economy than expected 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, up from a 2.4 percent rise in the previous quarter. The GDP data suggests that the US central bank will keep 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 then lost its gains following weak labor market data and turned negative. The Dollar Index fell by 0.5 percent. On the bond market, yields also retreated following US economic data, as investors sought "safe havens" due to economic uncertainty. The 10-year yield dropped 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 as the reason for the safe-haven demand.
Oil prices turned negative after the weak labor market data. Notations for Brent and WTI fell by up to 1.4 percent. Ongoing concerns about demand and the possibility of Opec+ increasing production in July weighed on oil prices. Meanwhile, US weekly crude oil inventories declined more than analysts had predicted.
Shares of Nvidia rose 3.2 percent following strong quarterly results, allaying concerns about the impact of the Trump administration’s chip sales ban to China. Shares of other AI infrastructure companies like Super Micro Computer were also in 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%) hit their highest level in 15 months. CEO Dave Calhoun suggested that aircraft deliveries to China could resume in June and that the company is approaching a production rate of 38 737-Max aircraft per month.
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Wall Street | Tariffs | Nvidia | Boeing
- The reinstatement of Trump's tariffs has sparked interest in the community policy discussions, as it may impact employment policies within various businesses and industries, especially those involved in international trade.
- The financial implications of the tariff decision, coupled with recent economic data releases, have fueled debates in politics and general-news platforms, with analysts offering their insights on the possible effects on the stock market, bond yields, and the dollar.
