US Stock Rally Halts as Trade Risks Remain in Focus – US Market Wrap

A historic stock market rally came to an end as Trump’s latest tariff remarks provided little relief to investors worried about the effects of his trade war on the economy and corporate earnings.

Even data indicating a pick-up in growth at US service providers was insufficient to erase equity losses, with the S&P 500 ending its longest rally in nearly 20 years. While Trump suggested that some trade deals could be reached as early as this week, there was no sign of an imminent agreement with China. As the president indicated plans to extend restrictive policies on US imports to the entertainment sector, companies such as Netflix and Paramount fell.

Recent economic data appears to have allayed market fears of a recession, but the impact of Trump’s tariff war is yet to be felt. Several market observers believe that tariffs will eventually slow the US economy as supply chains are disrupted and consumer confidence plummets, with levies potentially delivering at least a temporary inflation shock.

Attention will soon shift to Wednesday’s Federal Reserve decision, after bond traders reduced rate-cut bets that had steadily risen as Trump’s trade war wreaked havoc on financial markets. As long as the economy remains stable, Jerome Powell and his colleagues can justify their decision to stand pat.

The S&P 500 dropped 0.6%. The Nasdaq 100 declined 0.7%. The Dow Jones Industrial Average declined 0.2%. The yield on 10-year Treasuries increased three basis points to 4.34%. The Dollar declined 0.2%.
Oil prices fell as OPEC+ agreed to a massive output increase.