Key Points
- Wall Street indexes fell on Tuesday as investors worried about the impact of the U.S. trade war.
- Corporate earnings are now showing clear negative effects from tariffs, with GM reporting a $1.1 billion hit.
- A looming August 1 trade deadline with the EU and stalled talks with China are fueling market uncertainty.
- Investors are shifting to safer assets, driving up gold prices and lowering government bond yields.
Wall Street struggled on Tuesday as investors grew more nervous about President Donald Trump’s ongoing trade war. With a key deadline approaching and little progress in sight, corporate earnings reports are starting to reveal the negative impact of tariffs, resulting in a decline in major stock indexes.
The S&P 500 declined to 6,298.48 USD, reflecting a slight decrease of 0.11%. The Nasdaq 100 experienced a more notable decline, falling 0.49% to settle at 23,067.04 USD, signaling weakness in the tech-heavy index. In contrast, the Dow Jones Industrial Average bucked the downward trend, inching up 0.09% to close at 44,361.46 USD.
While many companies have beaten earnings expectations this quarter, their outlooks are becoming more cautious due to the uncertainty. The effects of the trade war are now clearly seeping into corporate profits. General Motors, for example, saw its core profit decline after steep tariffs took a $1.1 billion hit to its bottom line.
The trade tensions are global. Prospects for a deal with the European Union are fading as the August 1 deadline nears. Meanwhile, the U.S. and China are discussing another delay in their talks. Analysts noted that while Trump seems to want deals, his aggressive “bull in a China shop” approach is causing trading partners to push back.
The uncertainty sent investors running for safe-haven assets. Gold prices rose, while the U.S. dollar weakened. U.S. Treasury yields also fell for the third day in a row as investors bought up safer government bonds. In contrast, oil prices dropped due to fears that a prolonged trade conflict would slow the global economy and reduce demand.
