Market Volatility: Trump’s Tariff Plans and Interest Rate Concerns
As President-elect Donald Trump considers declaring a national economic emergency to impose tariffs, investors are on high alert. The S&P 500 slipped 0.2%, while the tech-heavy Nasdaq Composite fell 0.4%, and the Dow Jones Industrial Average also dropped 0.2%. The 10-year Treasury yield hovered near 4.68%.
Tariff Uncertainty Weighs on Markets
Trump’s plan to use emergency powers to justify tariffs has sparked concerns about the impact on the economy. The news comes as investors are already bracing for a wave of policy moves and executive orders as Inauguration Day approaches. The uncertainty surrounding tariffs has led to a decrease in investor confidence, with the benchmark Treasury yield spiking on Tuesday.
Interest Rate Concerns
Federal Reserve minutes, due later today, could reset investor bets on interest rate cuts. With inflation data pointing to a slower pace of rate cuts, traders now see a less than 50% chance of any easing before June. Strong economic data releases may be viewed as negative, leading to “higher for longer” rates, some analysts believe.
Labor Market Data
Private companies slowed their headcount growth in December, signaling moderating demand for hiring. However, the number of Americans making jobless claims fell unexpectedly last week, pointing to a stable labor market. The data will feed into expectations for the crucial December jobs report release on Friday.
Bitcoin Slumps
Bitcoin extended losses for a second day, hovering just below the $94,000 level. The token fell more than 3.5% over the past 24 hours amid a broader market sell-off over worries of tariffs and slower rate cuts.
E-commerce Boost
EBay stock rose 11% after Meta announced it will test listings from the e-commerce platform on Facebook Marketplace in the US, Germany, and France. The move comes after the European Commission fined Meta for breaching antitrust rules by tying Marketplace to its personal social network Facebook.
Quantum Computing Stocks Take a Hit
Nvidia CEO Jensen Huang suggested that quantum computing technology is probably two decades away. Quantum-related stocks, including Rigetti Computing, IonQ, and D-Wave Quantum, all fell more than 40%.
Retail Giant Meets with Trump
Walmart CEO Doug McMillon met with President-elect Donald Trump on Tuesday, discussing topics including tariffs. The retail giant is concerned about the impact of tariff hikes on its profit margins.
Fed Governor Supports Rate Cuts
Federal Reserve governor Chris Waller said he still supports cutting interest rates this year, believing inflation will continue to drift lower despite promises of sweeping tariffs from the new Trump administration.
Moderna Stock Sees Big Swings
Moderna stock jumped over 10% on Tuesday before reversing course and losing over 5% early Wednesday. The company is developing a vaccine for the bird flu, which has put its development in focus after the first reported bird flu death in the US.
Leave a Reply