Dow Jones and S&P 500 hit new records as Wall Street weighs Donald Trump’s tariff threat

He added that he would impose an additional 10% tariff on all Chinese imports.deploring China’s lack of progress in curbing the flow of illegal drugs into the United States.

His ultimatum coincides with promises made during the election campaign regarding “the introduction of a 60% tariff on all Chinese products.”

Car manufacturers, including General Motors Company (-8%), Ford Motor Company (-2.4%) and Stellantis N.V. (-5.5%), vulnerable to higher import duties, fell on Tuesday.

Trump’s tariff threats have raised concerns about a renewed global trade war between the world’s largest economies, a trend that has continued throughout much of his first term. This scenario does not bode well for global trade, especially for countries with heavy trade dependence on the United States.

In posts on his social network Pravda on Monday, Trump said China has not kept its promises to impose the death penalty for fentanyl traffickerswriting that “drugs are entering our country, primarily through Mexico, at levels never before seen.”

“Until they stop, we will charge China an additional 10% tariff on top of any additional tariffs on all of their many products coming into the United States of America,” Trump said.

The Federal Reserve retains the possibility of moving to a “neutral” policy

Members Federal Open Market Committee (FOMC) belonging Federal Reserve They will bet their future interest rate decisions on making “gradual” adjustments, according to minutes of their latest meeting released on Tuesday.

Reviewing the outlook for monetary policy, officials expected that if the data turned out “as expected,” inflation would continue to decline steadily to 2% and the economy would remain close to maximum employment. “It would probably be advisable to move gradually towards a more neutral monetary policy stance over time.”.

Wall Street; What happened to some stocks?

Amgen Inc. fell more than 8% after the pharmaceutical company said its potential weight-loss drug showed in clinical trials that patients lost up to 20% of their weight, lower than analysts’ expectations.

Rivian Automotive Inc. grew more than 1% after the electric vehicle maker said it received conditional approval for up to $6.6 billion in government loans to build an electric vehicle plant in Georgia and finance production of a midsize electric vehicle platform.

Monitor the input of quarterly results

Actions Kolya fell more than 18% after the retailer cut its full-year sales forecast for the third time this year, a sign the department store chain is struggling to attract shoppers ahead of a bargain-heavy holiday shopping season.

He also announced that his CEO, Tom Kinsburywill retire in January and will be replaced Ashley Buchananwho currently runs handicraft stores in Michaels Companies (-4.8%).

Actions Best buy they fell 4.7% after the electronics retailer cut its full-year sales forecast as it missed expected quarterly earnings due to weaker demand.

Dick’s sporting goods, On the contrary, it has increased. 1% after the retailer raised its full-year guidance “following what CEO Lauren Hobart called a great back-to-school shopping season” and better-than-expected comparable sales in the third quarter.

Actions Intel fell by 3% after US Department of Commerce said on Tuesday it was finalizing a government subsidy for 7.86 billion dollars for the tech giant, up from $8.5 billion announced in March after the California chipmaker received a separate $3 billion award from the Pentagon.

Deutsche Bank and three factors to consider in 2025

Analysts Deutsche Bank have identified three reasons that could derail the current growth of the market, which has shown significant growth through 2024. While markets appear resilient, the note warns that stretched valuations and ongoing vulnerabilities could lead to significant sell-offs if these risks materialize.

According to the bank, the slowdown in economic growth determines the most important threat to risk assets – the economic downturn.

Deutsche Bank analysts pointed to the summer of 2024, when a weaker-than-expected U.S. jobs report triggered an 8.5% drop in the S&P 500 and widened U.S. high-yield bond spreads by 84 basis points.

“The fact that we had a significant sell-off even though the data didn’t point to a recession raises the question of how bad it could have been if the data started pointing to one and showed a full contraction,” they explained. They. .

Looking ahead to 2025, the bar for growth surprises is said to be higher, according to consensus forecasts for GDP from USA belonging 2% or more.

“By 2025, the consensus forecast will already be above 2% for USA “So it should be harder to get a growth surprise now precisely because growth has exceeded forecasts for 2023 and 2024,” they argue.

geopolitical conflicts They can also undermine market confidence, the bank says. The April 2024 sell-off, fueled by rising tensions in the Middle East, sent the S&P 500 index down 5.5% and the price of Brent crude rising above $92 a barrel.

More recently, concerns about escalating relations between Russia and Ukraine have prompted a strong reaction of risk aversion. Deutsche Bank notes that “markets are clearly very nervous about any geopolitical escalation; if there is a new conflict or serious escalation, we know from recent experience that markets can react very negatively.”

Finally, resumption of inflation can destroy markets. Deutsche Bank noted that persistent inflation in early 2024 increased expectations of rate hikes and briefly pushed Treasury yields above 5%.

Although inflation has slowed, it remains above target. “Deutsche Bank warns that inflation could remain above 2% until 2026, making it an increasing risk as we approach 2025.”

Analysts conclude that while markets have so far resisted these risks, any of them could derail current growth.