US stocks edged lower on Tuesday as investors braced for more tariff policy shifts from President Donald Trump, and focus turned to inflation with testimony from Federal Chair Jerome Powell underway.
By mid-morning trade, stocks were off of their session lows with the Dow Jones Industrial Average (^DJI) slipped around 0.2% lower, while the benchmark S&P 500 (^GSPC) dropped roughly 0.1%. The tech-heavy Nasdaq Composite (^IXIC) also pulled back around 0.1%, after a winning day on Wall Street.
The tone is cautious in the wait for Trump to reveal his plan for universal like-for-like tariffs, promised for announcement midweek. The president on Monday imposed 25% tariffs on all steel and aluminum imports from March 12, according to executive orders. That puts further pressure on top trading partners Canada and Mexico.
Investors are trying to gauge how far Trump’s tariff threats will translate into action, as they worry about the impact of a trade war on corporate earnings, the global economy, and on inflation in particular. Gold (GC=F) set a fresh record as investors sought shelter from the uncertainty, before retreating on Tuesday.
Amid those concerns, markets are looking to Powell’s two-day testimony in Congress, starting Tuesday in the Senate, for any hint to the Fed’s thinking about how tariffs could impact pricing pressures. In his opening remarks, Powell told lawmakers the Fed is not in a rush to adjust interest rates.
Meanwhile, the countdown is on for January’s Consumer Price Index reading on Wednesday and its wholesale counterpart on Thursday, as inflation stays persistent.
On the earnings front, Coca-Cola (KO) shares rose after it beat estimates for fourth quarter profit and revenue as soda demand stayed robust amid price increases. Shopify’s (SHOP) stock bounced back from pre-market losses after the e-commerce company reported a downbeat first quarter profit forecast with better-than-expected holiday sales.
Meanwhile, an Elon Musk-led bid to buy OpenAI captured Wall Street’s attention as AI spending fears continue to weigh on the Magnificent Seven. The AI nonprofit’s CEO Sam Altman shot down the unsolicited offer of $97.4 billion, a significant undershoot of its valuation.
Elsewhere in tech, Meta (META) began to lay off workers as part of CEO Mark Zuckerberg’s pledge to cut thousands of jobs in a pivot to finding AI talent.
LIVE 9 updates
-
Powell: Playbook has been revised following SVB collapse
Fed Chair Jerome Powell said during the start of his two-day testimony on Tuesday that the playbook has been revised “in a lot of ways” following the stunning collapse of Silicon Valley Back (SVB) in 2023.
“The supervisors didn’t follow through aggressively enough on things that they’d said,” Powell said. “If they’d done that, that could have been enough to stop it. But a lot of it was just not focusing enough directly on what was a very large amount of interest rate risk, a large portfolio of long-term securities matched up with an unstable funding base.”
On March 9, 2023, depositors scrambled to pull out more than the $40 billion from SVB as panic spread throughout Twitter, along with other social media platforms like Slack and WhatsApp, after the bank revealed a $1.8 billion loss within its bond portfolio and plans to raise more than $2 billion in new capital.
“Somehow we don’t expect bank runs outside of a crisis in this country,” Powell added in his testimony. “And that’s what that was. It was a bank run. And bank runs are incredibly damaging. I think everyone learned a lot from that and is determined to do better.”
-
Powell says ‘we do not need to be in a hurry’ to cut rates
Fed Chair Jay Powell is set to begin taking questions from lawmakers in minutes, and in prepared remarks released ahead of his testimony, the chair reiterated his view that the central bank does not need to be in a hurry to cut interest rates.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.
Referring to inflation, Powell said pricing pressures remain “somewhat elevated relative to our 2 percent longer-run [inflation] goal.”
On the broader economy, Powell said it is expanding at a “solid pace.”
-
Coca-Cola on tariff impact, inflation
Coca-Cola (KO) posted another strong quarter as the company’s management team discussed the potential impact of Trump’s tariff policy and recent pricing pressures.
Yahoo Finance’s Brooke DiPalma has the details:
“Commodities will be in the low singles range overall, some pressures on the agricultural particularly juice and coffee that are a big part of our base,” Coca-Cola CFO John Murphy said on the earnings call. “We have the usual set of levers that will deploy to cover those.”
CEO James Quincey added that President Trump’s latest aluminum tariffs will predominantly impact the US market.
“If one package suffers an increase in input costs, we continue to have other packaging offerings that will allow us to compete in the affordability space,” he said, adding if aluminum gets more expensive, it will put more emphasis on plastic bottles. He called it a “manageable problem.”
-
Stocks open lower with tariffs top of mind
US stocks opened lower on Tuesday with tariff uncertainty top of mind for investors as traders also looked ahead to testimony from Federal Chair Jerome Powell on deck later this morning.
Shortly after the opening bell, Dow Jones Industrial Average (^DJI) moved around 0.3% lower, while the benchmark S&P 500 (^GSPC) also dropped roughly 0.3%. The tech-heavy Nasdaq Composite (^IXIC) pulled back around 0.5%, after a winning day on Wall Street.
-
Oil adds to gains amid signs of sanctions hit to Russia supply
Oil futures rose 1.4% on Tuesday, on track for a third day of gains as investors assessed signs that US sanctions on Russian crude are putting a dent in the major producer’s output.
Brent crude futures (BZ=F), the international benchmark, climbed to just below $77 a barrel, after closing 1.6% higher on Monday. US benchmark West Texas Intermediate futures (CL=F) moved up to $73.35 per barrel.
Russia’s oil production fell in January to further below its OPEC+ quota, Bloomberg reported. Meanwhile, its crude supplies are being offered to Chinese buyers at deeper discount as the US sanctions bed in, it said.
The signs of faltering Russian supply appeared to eclipse market worries about the impact on the global economy of Trump’s tariff overhaul, which promise to crimp demand.
-
The start of Trump 2.0 is not quite what Wall Street expected
President Trump’s unexpected policy moves are unsettling expectations at big financial institutions, David Hollerith reports:
Read more here.
-
Good morning. Here’s what’s happening today.
-
Hang Seng closes 1% lower as Asia stocks falter
Stock indexes in Asia fell on Tuesday as investors warily assessed the impact of Trump’s tariffs on steel and aluminum, while Chinese carmaker shares slid.
Hong Kong’s Hang Seng (^HSI) dropped over 1%, while the CSI 300 (000300.SS) in Shanghai Shenzen fell X%, both gauges reversing course after rising for several sessions.
The Sensex (^BSESN) in Bombay tumbled 1.3% amid concerns over the impact of the new 25% tariff on the primary aluminum producer’s exports to the US.
On the corporate front, shares of Chinese automakers Xpeng (9868.HK, XPEV) and Geely Auto (0175.HK, GELYF, GELYY) tumbled in Hong Kong, down 9% and 10% respectively.
The moves came after China’s BYD (1211.HK, BYDDY) launched free smart-driving features across most of its lineup, intensifying a regional EV price war and briefly lifting its share price to a record high. At the same time, fresh data showed Chinese car sales posted their biggest drop in almost a year in January.
-
Gold (GC=F) continues to reap the benefits of uncertainty in stock markets. President Donald Trump’s 25% tariffs on steel and aluminum have pushed the safe-haven asset back to an all-time high for the second consecutive week.
Bullion touched an all-time peak above $2,921 an ounce, maintaining momentum from a 1.7% boost in the day’s session prior.
Bloomberg reports:
