After turning in a mixed performance early in the session, the major U.S. stock indexes all moved to the upside over the course of the trading day on Tuesday. The Dow recovered from early weakness to end the day at another new record closing high.
The Dow fell by as much as 0.7 percent in early trading but ended the day up 123.74 points or 0.3 percent at 44,860.31. The S&P 500 (SPI:SP500) also climbed 34.26 points or 0.6 percent to a record closing high of 6,021.63, while the Nasdaq rose 119.46 points or 0.6 percent to 19,174.30.
The higher close by the major averages came as traders shrugged off President-elect Donald Trump’s latest threats to impose increased tariffs on Mexico, Canada and China.
In a post on his social media platform Truth Social, Trump said he would impose a 25 percent tariff on all products from Mexico and Canada on his first day in office, blaming the countries for the influx of illegal immigrants and illicit drugs into the U.S.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump said.
Trump said in a subsequent post that he would also impose an additional 10 percent tariff on Chinese products, claiming the country has not done enough to stop the “massive amounts of drugs, in particular Fentanyl, being sent into the United States.”
With Trump recently announcing he intends to nominate Scott Bessent as Treasury Secretary, traders may be optimistic the former president will not following through on his threats. Bessent has previously called for Trump’s planned tariff increases to be implemented gradually.
Stocks saw further upside as the minutes of the Federal Reserve’s latest monetary policy meeting revealed officials believe it will be appropriate to “gradually” lower interest rates.
The minutes said officials feel a gradual approach to lowering rates to a more neutral stance will be appropriate if economic data come in “about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment.”
The Fed said participants also noted that monetary policy decisions were not on a “preset course and were conditional on the evolution of the economy and the implications for the economic outlook and the balance of risks.”
Sector News
Software stocks turned in a strong performance on the day, driving the Dow Jones U.S. Software Index up by 1.4 percent to a record closing high.
Utilities and pharmaceutical stocks also saw considerable strength, with the Dow Jones Utility Average and the NYSE Arca Pharmaceutical Index climbing by 1.3 percent and 1.2 percent, respectively.
On the other hand, housing stocks moved significantly lower, dragging the Philadelphia Housing Sector Index down by 1.8 percent.
The weakness among housing stocks came after the Commerce Department released a report showing a substantial pullback by new home sales in the month of October.
Oil service, airline and computer hardware stocks also saw notable weakness, partly offsetting the strength in the aforementioned sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 0.9 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.
The major European markets also moved to the downside on the day. While the French CAC 40 Index slid by 0.9 percent, the German DAX Index fell by 0.6 percent and the U.K.’s FTSE 100 Index declined by 0.4 percent.
In the bond market, treasuries gave back ground after soaring in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.7 basis points to 4.302 percent.
Looking Ahead
Trading on Wednesday may be impacted by reaction to a slew of U.S. economic data, including the Fed’s preferred readings on consumer price inflation.
SOURCE: RTTNEWS