NEW YORK (AP) — The U.S. stock market is feeling more stable on Wednesday after a significant drop that erased the gains made following the presidential election last November.
The S&P 500 showed little change in morning trading after losing 6% since reaching its all-time high last month. This puts it back at levels seen before Trump took office. Meanwhile, the Dow Jones Industrial Average gained 111 points, or 0.3%, while the Nasdaq composite dipped slightly by 0.1%.
Traders are on edge, waiting to hear if Trump will adjust the tariffs imposed on Mexico, Canada, and China. This decision, made earlier this week, has ruffled feathers among the United States’ biggest trading partners, sparking fears of a trade war that could hurt economies globally.
Many economists warn that these tariffs might lead to higher costs for American consumers and could slow down global trade. There’s concern about a potential scenario called “stagflation,” where the economy stagnates while inflation rises. This situation is rare and can leave policymakers, like those at the Federal Reserve, with limited solutions.
The growing anxiety about stagflation has caused U.S. stocks to drop recently, wiping out the optimism that followed Election Day. Investors had hoped that Trump would ease regulations, cut taxes, and boost corporate profits.
Trump, during his address to Congress on Tuesday night, reaffirmed his intent to proceed with the tariffs, set to take effect soon, even if they cause some disruption. He stated, “Tariffs are about making America rich again and making America great again.”
However, signs indicate that both businesses and consumers are worried. Many consumers anticipate rising prices due to the tariffs, and overall confidence has decreased. Manufacturers are particularly feeling the pressure, with reports suggesting their growth is slowing down.
On Wednesday, mixed economic reports painted a varied picture. One report indicated that U.S. employers added fewer jobs than expected last month, which could signal trouble ahead of a more detailed jobs report coming this Friday. In contrast, another report showed better-than-expected growth in the services sector, even as businesses expressed concern about the uncertain landscape.
Meanwhile, bond market yields ticked up, with the yield on the 10-year Treasury rising to 4.23%. This increase came after the positive services report that had initially brought yields down. The Federal Reserve’s upcoming Beige Book, which gathers anecdotal reports from around the country, may provide more insight into current economic conditions.
The U.S. economy had been strong last year. A sudden downturn could push the Fed to lower interest rates to stimulate borrowing, but that might also lead to higher inflation, especially if tariffs cause everyday prices to rise.
In stock market activity, automakers saw prices rise on hopes that Trump might ease tariffs on vehicles from Mexico and Canada. Ford’s shares climbed 3.4%, while General Motors gained 4.3%.
Brown-Forman, the company behind Jack Daniel’s, saw its stock jump 9.1% due to stronger-than-expected profits. CEO Lawson Whiting confidently maintained the sales forecast despite the external uncertainties.
On the downside, Campbell’s stock fell 3.8% after the company revised its financial outlook downwards, citing poor performance in snack products.
Internationally, stock markets in Asia and Europe mostly rose. Hong Kong index surged 2.8%, South Korea’s by 1.2%, and France’s by 1.9%. German stocks rose 3.3%, partly driven by discussions among possible new government partners about relaxing debt limits for increased defense spending, in light of U.S. policy changes.
Outside the U.S., stocks have been outperforming the S&P 500, despite the challenges posed by Trump’s America-First policies.
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