Major U.S. stock indexes fell slightly early Tuesday after President Donald Trump announced new tariffs on steel and aluminum imports.
Shortly after markets opened, the S&P 500 dipped 0.31 percent, following similar losses for Asian markets. The Dow Jones Industrial Average was down 0.26 percent, and the tech-heavy Nasdaq dropped 0.48 percent.
Why It Matters
The stock market has been highly sensitive to trade policy developments, with investors closely monitoring potential economic ramifications. The tariffs imposed by Trump’s administration on steel and aluminum imports have reignited concerns over trade tensions, echoing market volatility from previous tariff disputes.
Federal Reserve Chair Jerome Powell will give his semi-annual testimony before Congress on Tuesday. His words will be scrutinized for insights into the Fed’s stance on interest rates, particularly as inflation concerns linger. The Fed has signaled caution regarding future rate cuts, a factor that could influence market volatility in the coming months.
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What To Know
On Tuesday, Asian markets reflected investor apprehension, with Hong Kong’s Hang Seng Index falling 1.06 percent to 21,294.86 and the Shanghai Composite slipping 0.12 percent to 3,318.06. Japan’s markets remained closed due to a national holiday. In contrast, South Korea’s KOSPI gained 0.71 percent to 2,539.05, while Australia’s S&P/ASX 200 remained largely unchanged.
In early European trading, France’s CAC 40 increased 0.2 percent, Germany’s DAX gained 0.3 percent, and Britain’s FTSE 100 remained flat.
The bond market showed minor movement, with the yield on the 10-year Treasury increasing to 4.53 percent from 4.50 percent. The two-year Treasury yield, which closely reflects expectations for short-term interest rates, held steady at 4.29 percent.
Oil prices remained volatile, with benchmark U.S. crude rising $1.21 to $73.53 per barrel, while Brent crude increased $1.33 to $77.20 per barrel. The U.S. dollar strengthened to $152.35 in currency markets against the Japanese yen, while the euro remained stable at $1.03.
Monday’s tariff announcement follows a plan to put 25 percent tariffs on goods from Canada and Mexico and 10 percent on Chinese products. Trump backed down on the former but has pressed ahead with China tariffs, for which Beijing retaliated.
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What People Are Saying
Vishnu Varathan, head of macro research at Mizuho, told the Associated Press: “Beijing’s restraint in targeting only a small sliver of U.S. goods is deemed to be a deliberately less than proportionate response to avert an escalatory tit-for-tat spiral…Nonetheless, the reality is that U.S.-China trade tensions are set to structurally ramp-up, even if a negotiated compromise is the endgame for Trump 2.0 tariffs.”
What Happens Next
Powell is scheduled to testify before the Senate on Tuesday and the House on Wednesday.
Meanwhile, corporate earnings season continues, with key reports from major tech and consumer goods companies potentially influencing market direction.
This article contains reporting by the Associated Press.
Update 2/11/25, 10:09 a.m. ET: This article was updated with additional information.