Wall Street's nerves jangled as Trump's tariff legal dispute stirred up turmoil
Wall Street Braces for Uncertainty as Appeals Court Reinstates Trump Tariffs
In a sudden turn of events, a federal appeals court reinstated the extensive tariffs imposed by former President Donald Trump, causing a ripple of unease on Wall Street. The US stock market reacted with a minor increase following the unexpected announcement, but analysts warn of potential volatility ahead.
Before the court's ruling, market observers had already cautioned investors against overenthusiasm. For most of the US's trading partners, the reversal will not significantly alter the status quo, according to Goldman Sachs. The ruling primarily concerns some tariff increases, such as the base tariff of 10 percent and the tariffs against countries like Canada, China, and Mexico, but not the tariffs affecting sectors like 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. The tech sector received a boost from Nvidia, which reported surprisingly strong quarterly results and an optimistic outlook after market close the previous day. However, preliminary data from the NYSE showed a shift in momentum, with 1,866 advancers compared to 865 decliners, and 91 stocks remaining unchanged.
Meanwhile, in a separate development, a meeting between President Trump and Fed Chairman Jerome Powell yielded no substantial results. A statement from the Federal Reserve indicated that Powell did not discuss his expectations for monetary policy during the meeting. The President reportedly expressed his belief that Powell was making a mistake by not lowering interest rates, which puts the US at an economic disadvantage compared to China and other countries.
Additionally, the number of initial jobless claims unexpectedly rose last week, but the second reading of the first quarter's Gross Domestic Product (GDP) showed a smaller contraction of the US economy than anticipated. The personal consumption expenditures (PCE) price index, favored by the US central bank as an inflation measure, rose by 3.6 percent, following a 2.4 percent increase in the previous quarter.
As the tariff tussle unfolds, the dollar initially appreciated but then surrendered its gains following weak employment data and economic uncertainty, causing the Dollar Index to fall by 0.5 percent. On the bond market, yields retreated following U.S. economic data, as investors sought safe-haven assets. The 10-year yield fell by 5 basis points to 4.43 percent.
Gold also benefited from the pursuit of safe-haven assets, with the troy ounce gaining 1.0 percent to $3,316. Market participants cited ongoing market uncertainty as a contributing factor to the yellow metal's rise.
In the oil markets, notations for Brent and WTI fell by up to 1.4 percent, driven by concerns over demand and the possibility of increased production by OPEC+. Meanwhile, U.S. weekly crude oil inventories dropped more than analysts had expected.
Nvidia shares experienced a 3.2 percent surge following the company's strong first-quarter results, which eased concerns about the impact of the Trump administration's chip sales ban to China. Shares of companies specializing in AI infrastructure, such as Super Micro Computer, were also in demand.
Despite a strong performance, Salesforce.com shares fell 3.3 percent after the company reported better-than-expected results and raised its earnings guidance, as RBC downgraded Salesforce to "Sector Perform." HP shares plummeted 8.3 percent after the company lowered its annual guidance.
Boeing shares registered a 3.3 percent gain, reaching their highest level in 15 months, as CEO Dave Calhoun hinted at resuming deliveries of aircraft to China in June and approaching a production rate of 38 737-Max aircraft per month.
- The reinstatement of Trump's tariffs has sparked a debate, with some community and employment policies urging caution in light of potential volatility in the business sector, including finance and politics.
- The ruling on tariffs has also stirred discussions in general-news circles, with attention focused on its impact on various sectors like steel, aluminum, auto imports, and the technology industry, as observed in the strong performance of Nvidia shares.
