Wall Street is in suspense as caution dominates the market amid ongoing tariff instability.
The US stock market closed Tuesday with minor losses, as uncertainty over trade duties continued to weigh on investor sentiment. Consumer and healthcare stocks were particularly affected, though strong earnings reports from major banks somewhat softened the overall picture.
Banks surprise, but warn of risks Shares of Bank of America and Citigroup grew after both banks posted quarterly earnings that beat analyst expectations. However, despite the encouraging figures, top bank executives voiced serious concerns that US consumer spending could be at risk if the trade tensions sparked by President Donald Trump's policies continue to escalate.
China responds: Boeing takes a hit One of the main factors pulling the Dow Jones down was a 2.4% drop in Boeing shares. The decline followed a Bloomberg report stating that Chinese authorities instructed national airlines to halt new deliveries from Boeing. The move is seen as a direct response to Washington's decision to impose 145% tariffs on specific categories of Chinese exports.
J&J disappoints: medical device sales miss targets Shares of Johnson & Johnson slipped 0.5% as investors were disappointed by weak performance in the company's medical devices division, which failed to meet market expectations. This came despite the company's overall revenue and earnings beating Wall Street forecasts for Q1.
Auto sector left behind: analysts cut outlooks Barclays dampened enthusiasm for the US auto sector on Tuesday by downgrading its rating for the industry. Analysts believe that new tariff measures by the Trump administration could negatively impact automaker profitability. Investors reacted quickly: Ford shares sank 2.7%, while General Motors declined 1.3%. The S&P Consumer Discretionary Sub-Index lost 0.8%, reflecting the broader market's caution.
Moderate losses across major indices All three major US indices ended the day in the red. The Dow Jones Industrial Average fell by 155.83 points (-0.38%) to 40,368.96. The S&P 500 dropped 9.34 points (-0.17%) to 5,396.63, while the Nasdaq Composite shed 8.32 points (-0.05%) to close at 16,823.17.
Pharma under pressure: Merck declines Healthcare stocks were not spared from the broader market sell-off. Shares of Merck dropped 1%, despite no company-specific negative news. It appears that investors are increasingly pricing in macro-level risks linked to the White House's trade measures.
Bank of America brings relief Amid market turbulence, Bank of America's earnings report stood out as a bright spot. The bank surpassed Q1 profit expectations, driven by growth in net interest income. Shares rose 3.6%, making it one of the day's top performers.
S&P 500 still struggling to reclaim previous highs The S&P 500 remains unable to recover its previous highs. Since its record close on February 19, the index has plummeted 12.2%. Year-to-date, it's down about 8%, reflecting ongoing volatility and mounting concerns over global economic stability.
US chips under scrutiny: tech sector faces pressure The US government has tightened export controls on microchips crucial for AI development. The new rules impact Chinese-bound shipments from tech giants Nvidia, AMD, and H20, including Nvidia's flagship MI308 model. Following the announcement, Nvidia warned the measures could cost the company $5.5 billion, sending its shares down 6% after hours.
Trump pushes on: critical minerals in the crosshairs President Donald Trump is doubling down on his aggressive trade strategy, now eyeing the critical minerals sector. He has ordered an investigation that could lead to new tariffs on imports of strategically important minerals, many of which are heavily sourced from China.
A glimmer of hope? China's GDP beats expectations Despite rising tensions, China's economy showed resilience. The country's GDP grew 5.4% in Q1, surpassing analyst forecasts. However, markets note that these figures predate the US tariffs, suggesting that a slowdown may still lie ahead.
Asia slips: tech stocks bruised hard The MSCI Asia-Pacific Index (ex-Japan) ended its four-day winning streak, falling 1.3%. The Hang Seng Index in Hong Kong dropped 2.3%, largely due to sell-offs in tech stocks following the new US export restrictions.
Wall Street feels the strain: Nasdaq futures slide US markets remain under pressure. Nasdaq futures fell 1.3%, reflecting investor pessimism over future developments in the US-China trade standoff. Risks in the tech sector and global uncertainties are once again outweighing hopes for stabilization.
Europe braces for a drop in stocks The unease has spilt into Europe. EUROSTOXX 50 pre-market indicators suggest a potential 0.7% drop at the open. It appears the continent won't remain insulated from the consequences of global geo-economic friction.
Gold surges: investors flee to safe havens As uncertainty mounts, gold prices soared 1.3%, hitting a new all-time high of $3,275 per ounce. The market is clearly pricing in a prolonged period of volatility and is seeking out traditional safe-haven assets.
UK inflation: room for maneuver Today, traders will be closely watching UK inflation data. Projections call for a drop in the headline rate to 2.7% (from 2.8%), while core inflation is expected to ease from 3.5% to 3.4%. These figures may pave the way for the Bank of England to further ease monetary policy, with markets pricing in an 80% chance of a May rate cut.
Canada is in wait-and-see mode Adding to the global intrigue is the upcoming Bank of Canada policy meeting. Investor sentiment is more cautious here, with only a 40% probability of a rate cut. The reason? Political uncertainty, with nationwide elections set for the end of the month, makes the central bank hesitant to act decisively in the near term.
All eyes on Powell: markets hold their breath Later today, Federal Reserve Chair Jerome Powell is scheduled to speak. Markets are eagerly anticipating clues about the Fed's future policy path. The key question: Will he echo the unexpectedly dovish tone expressed earlier by Fed Governor Christopher Waller? If Powell confirms such a stance, it could be a strong signal for investors to bet on upcoming rate cuts, potentially paving the way for near-term monetary easing.
