US Stock Market Performance Amid Tariff Tensions and Fed Minutes Release
Published on February 19, 2025, 09:00 PM UTC
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US Stocks Mostly Higher on Policy and Trade Uncertainty
US stocks generally rose on Wednesday as investors weighed President Trump's latest tariff threat and analyzed Federal Reserve minutes for insights into future policy. The S&P 500 (^GSPC) gained approximately 0.2% after reaching a record high on Tuesday, while the Nasdaq Composite (^IXIC) traded slightly above flat. The Dow Jones Industrial Average (^DJI) added roughly 0.1%.
Minutes from the Fed's January meeting indicate that most central bank officials favored maintaining restrictive monetary policy. Participants noted that interest rates could stay high if the economy remains strong and inflation persists. However, several also suggested that policy could be eased if labor market conditions deteriorate, economic growth weakens, or inflation falls faster than anticipated.
The committee acknowledged it was well-positioned to assess evolving economic conditions and emphasized that further progress on inflation was necessary before adjusting rates. Participants expressed concerns about potential effects of changes in trade and immigration policies on inflation.
In trade-related developments, Trump's proposed tariffs have been on investors' minds. Additional duties on automobiles, semiconductors, and pharmaceuticals were announced late Tuesday. A flat 25% tariff would apply to all foreign automakers starting April 2. Last week, Trump imposed global 25% tariffs on steel and aluminum imports, effective March 12. He also ordered studies on reciprocal tariffs on trading partners. Tariffs of 25% on Mexico and Canada are expected next month, while 10% duties on China have already been implemented.
Meanwhile, analysts express skepticism about a potential breakup of Intel (INTC), which has experienced a massive upswing due to reported talks with TSMC (TSM) and Broadcom (AVGO). Some analysts believe that a breakup could disrupt the semiconductor industry.
The minutes also highlighted economic uncertainties, including the neutral policy rate, the economy's potential growth, and maximum employment levels. These uncertainties are expected to continue influencing policy decisions.
Additionally, JPMorgan strategist Antonin Delair studied 126 social media posts from Trump since Election Day and observed that mentions of the stock market have declined. In his first term, Trump frequently posted about positive economic indicators. However, this time, he has focused more on issues related to the debt ceiling, government spending, and tariff benefits.
Bank of America (BofA) suggests that Apple (AAPL) may raise prices if Trump follows through with his tariff threat. BofA estimates that a 10% tariff on Apple products imported into the US could reduce earnings by 2-3%. Apple would need to raise prices by approximately 9% to offset the impact of tariffs.
Despite the surge in 2024, the "Magnificent Seven" tech stocks (Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia) have faced challenges in 2025. Their rankings in S&P 500 performance have declined, with only Meta remaining in the top 200.
Apple introduced the iPhone 16e at a budget-friendly price of $599, featuring the same chip and camera system as its higher-end models.
Super Micro Computer (SMCI) saw a surge in its stock price, recovering losses from an earlier report alleging accounting violations.
Hims & Hers (HIMS) shares rallied after the company announced plans to introduce at-home lab testing services.
DeepSeek, an AI chatbot operator, is reportedly in talks with Alibaba (BABA) and Chinese state-affiliated funds for potential investment.
Nikola (NKLA) filed for bankruptcy, ending years of struggles for the electric vehicle maker.
Etsy (ETSY) shares fell premarket after missing holiday sales estimates and posting weaker-than-expected revenue and gross merchandise sales.
European stocks retreated on Wednesday due to disappointing earnings and concerns over Trump's proposed tariffs on autos, chips, and drugs.
Trump proposed 25% tariffs on automobile imports from early April, which could impact automakers globally.
Asian markets declined, reversing a recent rally, due to tariff concerns and uncertainties surrounding a surge in Chinese stocks.
HSBC reported a 6.6% rise in annual profit, beating market expectations, and announced a share buyback.
Oil prices rose as the ongoing Ukraine-Russia war continues to disrupt supply. Peace talks between the US and Russia are being closely monitored for their impact on markets.