The stock market was little changed on Tuesday after President Donald Trump’s tariffs on Chinese imports went into effect.
The Dow Jones Industrial Average was down 40 points, or 0.1%. The S&P 500 was flat. The Nasdaq Composite was up 0.1%.
The yield on the 2-year Treasury note was up to 4.27%. The 10-year yield was up to 4.58%.
Stock futures were actually trading higher last night after Trump negotiated a one-month pause on his planned tariff on Canadian imports, but such gains disappeared when the China tariffs went through without a last-minute deal.
China responded with 15% import taxes on U.S. crude oil, machinery, and some cars, in addition to a 10% increase on tariffs on coal and liquefied natural gas.
“One trade war ends, and another one begins,” writes Rosenberg Research’s David Rosenberg. “It doesn’t look like any conversation between Donald Trump and Xi Jinping went as well as the ones that took place between the President and the Mexican and Canadian leaders yesterday as China has indeed called the bluff and retaliated. So far, a rather restrained market response.”
Rosenberg points out that it’s worth paying attention to how the market reacted on Monday when Wall Street really thought tariffs on Mexico and Canada would go through.
“The big rally we initially saw in Treasuries suggested that bond investors were able to see the proposed tariffs for what they are: a vicious price-level shift with no lasting inflationary implications,” he writes. “And the meltdown in the stock market showed that investors in equities realized what the negative trade action would do to growth in aggregate demand (lower) and profit margins (squeezed).”
Shared by Golden State Mint on GoldenStateMint.com
