NEW YORK — U.S. stocks are hanging around their records on Tuesday as Wall Street takes Donald Trump’slatest talk about tariffs in stride, even if they could roil the global economy were they to take effect.
The S&P 500 rose 0.3% in early trading and was on track to edge past its all-time high set a couple weeks ago. The Dow Jones Industrial Average lost 197 points, or 0.4%, from its own record set the day before, while the Nasdaq composite was 0.6% higher, as of 9:35 a.m. Eastern time.
Stock markets abroad were down, but mostly only modestly, after President-elect Trump said he plans to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office. Stock indexes were down 0.1% in Shanghai and nearly flat in Hong Kong, while Japan’s Nikkei 225 fell 0.9%.
Trump has often praised the use of tariffs, but investors are weighing whether his latest threat will actually become policy or is just an opening point for negotiations. For now, the market seems to be taking it more as the latter.
Unless the United States can prepare alternatives for the autos, energy products and other goods that come from Mexico, Canada and China, such tariffs would raise the price of imported items all at once and make households poorer, according to Carl Weinberg and Rubeela Farooqi, economists at High Frequency Economics. They would also hurt profit margins for U.S. companies, while raising the threat of retaliatory tariffs by other countries.
General Motors sank 5.5%, and Ford Motor fell 2.3%.
Beyond the pain it would cause U.S. households and businesses, such tariffs could also push the Federal Reserve to slow or even halt its cuts to interest rates. The Fed had begun cutting its main interest rate from a two-decade high just a couple months ago to offer support to the job market. While lower interest rates can boost the overall economy and prices for investments, they can also offer more fuel for inflation.
Trump’s tariff talk came just hours after U.S. stocks rose Monday amid excitement about his pick for Treasury secretary, Scott Bessent. The hope was that the hedge-fund manager could help steer Trump away from policies that could lead to a much bigger U.S. government deficit, which is how much more it spends than it takes in through taxes and other revenue.
The talk about tariffs overshadowed another set of mixed profit reports from U.S. retailers that answered few questions about how much more shoppers can keep spending. They’ll need to stay resilient for the economy to continued to avoid a recession that economists worried may be an inevitable consequence of the high interest rates the Fed imposed to get inflation under control.
Kohl’s tumbled 19.7% after its results for the latest quarter fell short of analysts’ expectations. CEO Tom Kingsbury said sales remain soft for apparel and footwear, which helped to drag its revenue lower. Kingsbury said a day earlier that he plans to step down as CEO in January. Ashley Buchanan, Michaels CEO and retail veteran, will replace him.
Best Buy fell 8% after likewise falling short of analysts’ expectations, but Dick’s Sporting Goods rose 1.8% after a strong back-to-school season helped it beat analysts’ expectations for the latest quarter.
Strength for Big Tech stocks was also helping to prop up U.S. indexes. Gains of 1.3% for Nvidia and 1.7% for Amazon were the two strongest force lifting the S&P 500.
In the bond market, Treasury yields were mixed and moving relatively modestly following their big drop from a day before driven by relief following Trump’s pick for Treasury secretary.
The yield on the 10-year Treasury rose to 4.29% from 4.28% late Monday, but it’s still well below the 4.41% level where it ended last week.
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AP Business Writer Elaine Kurtenbach contributed.
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