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Financial-Markets 07/14 16:02
NEW YORK (AP) -- U.S. stock indexes hung near their records on Monday
following President Donald Trump's latest updates to his tariffs, as
speculation continues on Wall Street that he may ultimately back down on them.
The S&P 500 edged up by 0.1% to pull within 0.2% of its all-time high set on
Thursday. The Dow Jones Industrial Average added 88 points, or 0.2%, and the
Nasdaq composite climbed 0.3% to set a record.
Stock indexes elsewhere around the world were mixed in their first trading
after Trump announced plans over the weekend for 30% tariffs on goods from
Mexico and the European Union. They won't take effect until Aug. 1, the same
deadline that Trump announced last week for updated tax rates on imports from
Japan, South Korea and a dozen other countries.
The latest postponements for Trump's tariffs allow more time for him to
reach trade deals with other countries that could lower the tariff rates and
prevent pain for international trade. They also feed into speculation that
Trump may ultimately back down on his tariffs if they end up creating too much
damage for the economy and for financial markets.
If Trump were to enact all his proposed tariffs on Aug. 1, they would raise
the risk of a recession. That would not only hurt U.S. voters but also raise
the pressure on the U.S. government's debt level relative to the economy's
size, particularly after Washington approved big tax cuts that will add to the
deficit.
"We therefore believe that the administration is using this latest round of
tariff escalation to maximize its negotiating leverage and that it will
ultimately de-escalate, especially if there is a new bout of heightened bond
and stock market volatility," according to Ulrike Hoffmann-Burchardi, global
head of equities at UBS Global Wealth Management.
"As usual, there are many conditions and clauses that can get these rates
reduced," said Brian Jacobsen, chief economist at Annex Wealth Management.
"That's probably why the market might not like the tariff talk, but it's not
panicking about it either."
For the time being, all the uncertainty around tariffs could help keep
markets unsteady. This upcoming week has several potential flashpoints that
could shake things.
On Tuesday will come the latest reading on inflation across the United
States. Economists expect it to show inflation accelerated to 2.6% last month
from 2.4% in May.
Companies are also lining up to report how they performed during the spring.
JPMorgan Chase and several other huge banks will report their latest quarterly
results on Tuesday, followed by Johnson & Johnson on Wednesday and PepsiCo on
Thursday.
Fastenal, a distributor of industrial and construction supplies, on Monday
reported a stronger profit for the latest quarter than analysts expected. Its
stock rose 4.2%, though it also said that market conditions remain sluggish.
Shares of Kenvue rose 2.2% after the former division of Johnson & Johnson
said CEO Thibaut Mongon is stepping down. Kenvue, the maker of Listerine and
Band-Aid brands, is in the midst of a strategic review of its options,
"including ways to simplify the company's portfolio and how it operates,"
according to Larry Merlo, the board's chair.
Waters slumped 13.8% after saying it had agreed to merge with Becton,
Dickinson and Co.'s biosciences and diagnostic solutions business in a deal
valued at roughly $17.5 billion.
All told, the S&P 500 rose 8.81 points to 6,268.56. The Dow Jones Industrial
Average added 88.14 to 44,459.65, and the Nasdaq composite climbed 54.80 to
20,640.33 to top its last all-time high set on Thursday.
In the bond market, Treasury yields held relatively steady. The yield on the
10-year Treasury slipped to 4.42% from 4.43% late Friday.
In stock markets abroad, indexes fell across much of Europe. Germany's DAX
lost 0.4%, and France's CAC 40 fell 0.3%. But indexes rose 0.8% in South Korea
and 0.3% in Hong Kong.
Chinese shares advanced after the government reported that exports rose last
month as a truce in a tariff war prompted a surge in orders ahead of the Aug. 1
deadline for reaching a new trade deal with Washington.
Some of the biggest moves in financial markets were for crypto, where
bitcoin continues to set records. This upcoming week is "Crypto Week" in
Washington, where Congress will consider several bills to "make America the
crypto capital of the world."
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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