On Tuesday, November 26, 2024, pedestrians were seen walking by the New York Stock Exchange. The scene, captured by photographer Peter Morgan for the Associated Press, highlighted the bustling activity around the iconic financial hub.
U.S. stock markets soared to new highs, shrugging off President-elect Donald Trump’s latest comments on imposing tariffs on key trading partners. The S&P 500 surged 0.6% to set a fresh all-time high, with the Nasdaq and Dow Jones climbing 0.6% and 0.3%, respectively. Major tech companies like Amazon and Microsoft drove much of the momentum.
The upbeat performance contrasted with international markets, where stocks saw minor losses. Trump's proposal to levy broad tariffs on Mexico, Canada, and China sparked mild ripples, but many investors interpreted his comments as more of a negotiation tactic than an imminent policy. Analysts warn, however, that such measures, if enacted, could raise prices on imported goods, strain household budgets, and squeeze corporate profits.
Automakers and Retailers Feel the Pinch
The threat of tariffs hit companies heavily reliant on international imports. General Motors and Ford Motor suffered sharp declines of 8.2% and 2.6%, respectively, due to their dependence on Mexican auto manufacturing. Constellation Brands, known for importing Mexican beer brands like Modelo, dropped 3.9%.
Retail stocks were also under pressure after mixed earnings reports. Kohl’s plunged 17.6% as its quarterly performance fell short of expectations, compounded by news of its CEO’s departure early next year. Best Buy dropped 4.7%, while Dick’s Sporting Goods, despite surpassing earnings projections, slipped 1.4%.
Meanwhile, J.M. Smucker saw a 5.4% rise, driven by strong sales of its popular products such as Jif peanut butter and Meow Mix cat food. These mixed results highlight uncertainty about consumer spending, a key driver of the economy in the face of ongoing high interest rates.
Tariffs and the Federal Reserve's Next Moves
Economists caution that sweeping tariffs would disrupt supply chains and potentially provoke retaliatory measures from trading partners. This could deter the Federal Reserve from further reducing interest rates, a move it recently initiated to support the economy. Minutes from the Fed's latest meeting suggest a cautious approach, favouring gradual rate cuts.
However, optimism about Scott Bessent, Trump's Treasury Secretary pick, briefly boosted market sentiment. Investors hope the hedge fund manager’s fiscal expertise might moderate Trump’s more aggressive economic policies.
Tech and Crypto Markets Stand Out
Technology stocks provided crucial support, with Amazon and Microsoft gaining 2.8% and 2%, respectively. Cryptocurrency markets, on the other hand, saw Bitcoin retreat from its recent peak of $99,000, sliding to around $91,600. While Bitcoin's initial surge mirrored post-election euphoria, recent shifts suggest a cooling-off period for speculative assets.
