The US stock market attained highs on Tuesday amid indexes recovering from tariff fears. In any case, Donald Trump announced market-moving tariff plans on Monday evening. The announcement came as traders processed the Federal Reserve's minutes from the last meeting. This post unravels the stock market amid tariff fears.
Traders received Donald Trump's social media announcement on Monday with shock. The president-elect announced that China's imports into the US would incur an additional 10% tariff. Besides, imports from Canada and Mexico would incur a 25% duty. Trump announced these measures to help curb migrants and drugs.
The stock market indicated that traders sold off after the announcement before recovering on Tuesday. The NASDAQ Composite rose by 0.63%, while the S&P 500 increased by 0.57%. Meanwhile, the Dow Jones Industrial rose by over 100 points.
The 10-year Treasury yield increased to 4.298% by three basis points. Meanwhile, the US dollar rose against the Mexican peso and Canadian dollar. International stocks declined due to the fear of increasing trade wars. In addition, South Korean, Japanese, and European stock indexes declined due to Trump's social media posts.
Stock traders remained optimistic about the cease-fire deal updated between Lebanon and Israel. In any case, the cease-fire deal would become effective on 27th November morning to end a 14-month conflict between Hezbollah and Israel.
On the other hand, US stock traders processed the latest Federal Reserve minutes on monetary policy. The central bank officials publicized that they would recommend gradual rate cuts. Oxford Economics' Chief US chair explained that many central bank officials remained concerned about the risks of FED rate cuts.
Thus, the FED funds rate equilibrium complicated the assessment of how monetary policy should help manage the inflation rate. This week, the stock market will determine the next direction based on data points like personal consumer expenditures, third-quarter GDP revision, and initial jobless claims.
The stock market direction will change based on the reactions to the US tariffs and the subsequent decision of the United States Federal Reserve. In any case, Prime Minister Justin Trudeau announced that Canada will likely comply with the new tariffs. Yet, Claudia Sheinbaum, Mexican President, announced that Mexico would retaliate.
Overall, President Donald Trump insists that the US government will maintain strict importation standards to help curb immigration and drug trafficking. Analysts believe the stock market will maintain an upward trend with another rate cut.
The Dow Jones and S&P 500 recorded a surge on Tuesday, but traders remained wary regarding new US proposed tariffs. Meanwhile, FED officials are uncertain about the next interest rate decision, calling for a gradual and more investigated decision.
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