[UNITED STATES] The S&P 500 and Nasdaq Composite both closed higher on Tuesday, following a volatile day on Wall Street driven by market anxiety over the Trump administration's forthcoming tariff pronouncements.
Financial markets have been volatile in recent weeks as investors assess the economic impact of US President Donald Trump's expansive tariff plans, which have raised concerns about a US economic slowdown and higher inflation.
The tariff debate has intensified as analysts warn of potential ripple effects across global supply chains, particularly in sectors like automotive, electronics, and agriculture. Earlier this week, the European Union signaled it may retaliate with targeted levies on American goods, further fueling fears of a trade war. Economists at Goldman Sachs estimate that a full-scale escalation could shave 0.5% off global GDP growth this year, adding pressure to an already fragile economic outlook.
Some of the market anxiety is likely to vanish once Trump presents his tariff plan on Wednesday during an event in the Rose Garden at 4 p.m. EDT. Investors will welcome clarification on individual tariff measures, but the general background is expected to remain highly unpredictable, making it difficult for markets to agree on directionality.
Market strategists note that even after the tariff details are released, much will depend on how trading partners respond and whether the measures trigger a domino effect of protectionist policies. "This isn’t just about the US—it’s about how the world reacts," said Diane Swonk, chief economist at KPMG. "If other countries retaliate aggressively, we could see a prolonged period of market dislocation and slower capital investment."
"The fact of the matter is sentiment has washed out, and positioning is still fairly light," said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.
"I don't think we're going to get the type of clarity that investors and business leaders want," he said afterwards. "And at the end of the day, we spend a lot of time talking about tariffs, but the bigger story is we are dealing with an economy that is not firing on all cylinders." According to Melson, investors are currently "sitting on their hands, biding their time."
This sentiment was echoed in the three Wall Street benchmarks on Tuesday, which fluctuated between positive and negative territory for much of the day before concluding the afternoon with some reasonable momentum.
The bond market also reflected the cautious mood, with the yield on the 10-year Treasury note dipping slightly to 4.22%. Investors have been flocking to safer assets amid the uncertainty, though some analysts suggest that if tariffs lead to inflationary pressures, the Federal Reserve may delay rate cuts anticipated later this year. "The Fed is in a tough spot," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "They can’t ignore the potential for tariffs to reignite inflation, even as growth slows."
The S&P 500 gained 21.22 points, or 0.38%, to 5,633.07 points, while the Nasdaq Composite climbed 150.60 points, or 0.87%, to 17,449.89. The Dow Jones Industrial Average edged down 11.80 points, or 0.03%, to 41,989.96.
Gains on the Nasdaq and S&P 500 were fueled by rallies in technology companies, which had been among the hardest hit in the first few weeks of the year.
Tesla led big-tech advancements, rising 3.6% ahead of its first-quarter vehicle delivery report on Wednesday. Other Magnificent Seven equities, including Amazon.com, Microsoft, and Meta Platforms, climbed by 1% to 1.8%.
The tech rebound comes despite lingering concerns about overvaluation and regulatory scrutiny. The sector remains sensitive to interest rate expectations, with many high-growth stocks struggling earlier this year as Fed officials pushed back on aggressive rate-cut forecasts. However, some investors see the recent pullback as a buying opportunity, especially for companies with strong AI-driven earnings potential. However, declines in healthcare and aviation weighed on the S&P.
Johnson & Johnson was the S&P 500's poorest performer, plunging 7.6% and bringing the broader healthcare sector down 1.8% to the bottom of the 11 S&P sectors. A US bankruptcy judge denied the company's $10 billion offer to settle tens of thousands of lawsuits alleging that its baby powder and other talc products cause ovarian cancer.
Meanwhile, Delta Air Lines, American Airlines, and Southwest Airlines all fell between 2.4% and 5.9%, as Jefferies analysts downgraded equities due to concerns that economic uncertainty will affect both business and retail travel demand.
Some of the newest public businesses experienced significant gains among individual stocks. Newsmax, a conservative news channel, rocketed for the second day in a row, surging 208% after a more than 700% surge on its NYSE debut Monday. CoreWeave, which has had a more rough start since going public on Friday, rose 37.3% to trade above the artificial-intelligence startup's IPO price. Volume on US markets was 15.09 billion shares, compared to the 15.83 billion average for the session for the previous 20 trading days.
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