U.S. Stocks Close Higher Amid Trump's Tariff Threats and Fed Minutes

U.S. stock markets ended Wednesday's session on a positive note as investors weighed President Trump's latest tariff announcement and digested the Federal Reserve's meeting minutes for insights into future policy direction.

The benchmark S&P 500 (^GSPC) gained 0.24%, reaching a fresh record high of 6,144.15 after setting a record on Tuesday. The Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) both rose marginally by 0.07% and 0.16%, respectively.

Fed Minutes: Restrictive Policy Maintained

The meeting minutes from the Fed's January gathering revealed that most central bank officials favored maintaining the restrictive policy stance amid concerns over persistent inflation. "Many participants noted that the Committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated, while several remarked that policy could be eased if labor market conditions deteriorated, economic activity faltered, or inflation returned to 2 percent more quickly than anticipated," the minutes stated.

Participants emphasized that the committee was well-positioned to assess the "evolving outlook for economic activity" and that further progress on inflation was necessary before adjusting rates. They also recognized potential "upside risks to the inflation outlook," citing possible effects of alterations in trade and immigration policies.

Trump's Tariff Announcement

On the trade front, investors remained focused on the impact of President Trump's proposed tariffs. On Tuesday, he announced additional duties on autos, chips, and pharmaceuticals, with flat tariffs "in the neighborhood of 25%" set to be applied to all foreign automakers starting April 2. Last week, he imposed global 25% tariffs on steel and aluminum imports, effective March 12. Further reciprocal tariffs on trading partners were also ordered under consideration.

Market Analysts' Views

Despite the tariff uncertainty, BlackRock's lead portfolio manager, David Rogal, asserted that investors' belief in a future rate cut rather than a hike remained crucial for market stability.

Short Sellers Lose Billions

Short sellers, who bet against stock prices, have suffered substantial losses of $73 billion in the U.S. and Canadian markets to start 2025, according to data from S3 Partners. The upward trend in the S&P 500, fueled by short squeezes, has contributed to their losses.

Intel Stock Falls

Intel (INTC) shares declined more than 5% on Wednesday, ending a significant upswing that had seen the company post its largest five-day gain in its history as a publicly traded entity. Analysts raised concerns over potential deals with TSMC and Broadcom to restructure Intel.

Magnificent Seven Underperform

The "Magnificent Seven" tech stocks - Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) - have underperformed the market in early 2025, with most falling below the S&P 500's year-to-date performance.

Apple Introduces iPhone 16e

Apple unveiled its new iPhone 16e, a budget-friendly option with its proprietary Apple Intelligence platform and an in-house modem. The device, priced at $599, will be available from February 28.