Photo Courtesy of AP
NEW YORK — Wall Street showed signs of stability Tuesday, with U.S. stock indexes making only modest moves in early trading, following a stronger performance in Europe and Asia earlier in the day.
As of 9:35 a.m. Eastern time, the S&P 500 was up by 0.1%, recovering from a sharp drop the day before, when concerns about President Donald Trump’s tariffs sparked fears of a trade war that could harm global economies, including the U.S.
Meanwhile, the Dow Jones Industrial Average dipped 42 points, or 0.1%, and the Nasdaq composite climbed 0.3%.
On Monday, Trump agreed to delay the implementation of tariffs on U.S. imports from Canada and Mexico for one month, with the Canada announcement coming after the close of markets. This decision fueled optimism on Wall Street, reinforcing the belief that Trump’s tough rhetoric on tariffs is more about negotiation tactics than long-term policy. Investors hope the tariffs are simply a bargaining chip, not a permanent fixture in trade relations.
This hope rests, in part, on the idea that Trump would be dissuaded by the potential damage a prolonged trade war could cause to the stock market, which he has often referenced as a barometer for his success. However, analysts caution that the risk of a trade war still looms, and some suggest investors should brace for more volatility as Trump’s threats should not be dismissed entirely.
“Investors seem to view the equity market as a measure of the administration’s success, with any policy that harms risk assets likely to be reversed quickly,” wrote Bank of America strategists led by Mark Cabana. “We advise caution.” They also noted that the Trump administration’s transactional approach means “nothing is settled until it’s final.”
Trump is moving ahead with a 10% tariff on Chinese imports, prompting retaliatory actions from China on Tuesday, including tariffs on select American goods and an antitrust investigation into Google. The timing of these measures coincided with the implementation of U.S. tariffs on Chinese products.
In response, Alphabet, Google’s parent company, saw its stock rise by 0.9% in early trading.
Elsewhere on Wall Street, stocks that had experienced significant swings on Monday due to tariff concerns were more stable. Automakers, which had dropped due to fears over production in Mexico, saw smaller movements: General Motors slid by just 0.1%, while Ford Motor climbed 1.5%.
The focus was also on corporate earnings, which likely would have been the center of attention had it not been for ongoing tariff concerns.
Palantir Technologies surged 24.8% after reporting stronger-than-expected quarterly profits and offering optimistic guidance for the year ahead. The Denver-based company also saw a 45% year-over-year increase in revenue from government contracts in Q4, prompting CEO Alexander Karp to describe Palantir as a “software juggernaut” in a letter to shareholders.
On the downside, PepsiCo fell 2.5% as it reported weak North American demand for snacks and drinks, leading to its second consecutive quarterly decline in sales. Despite raising prices, customers increasingly turned to cheaper alternatives.
Merck saw its stock tumble 11.7% after beating sales and profit expectations but issuing a disappointing outlook for the future.
In the bond market, the yield on the 10-year Treasury ticked up slightly to 4.57% from 4.56% late Monday.
Across the Atlantic, London’s FTSE 100 fell 0.3%, but other major European markets showed modest gains.
In Asia, Hong Kong’s Hang Seng soared 2.8%, while South Korea’s Kospi gained 1.1%.
