Key points
- Mixed performance in major US stock indices following Monday’s pullback.
- Trump attempts to remove Fed Governor Lisa Cook, sparking concerns about Fed independence.
- Trump Threatens New Tariffs on Digital Services, Escalating Trade Tensions. 10-year Treasury yields fell to 4.26%, while 30-year yields rose to 4.9%.
- Investors await Nvidia’s earnings report, with high expectations despite China’s restrictions on chip sales.
US stocks displayed a mixed performance on Tuesday, as investors grappled with President Trump’s continued efforts to remove Federal Reserve Governor Lisa Cook and his threat of imposing new tariffs on countries with digital services taxes.
While the S&P 500 and Nasdaq Composite saw modest gains of nearly 0.2%, the Dow Jones Industrial Average remained relatively flat, following a retreat on Monday after a strong week. This cautious market sentiment reflects uncertainty surrounding Trump’s actions and their potential economic impact.
Trump’s renewed attack on the Federal Reserve, claiming “sufficient cause” to remove Cook, despite her rejection of his demands, fueled concerns about the central bank’s independence. Cook herself dismissed Trump’s authority to fire her, further escalating the tension.
This move has raised concerns among investors about the potential for politically influenced monetary policy, which could impact interest rates and inflation. Longer-dated US Treasury bond prices reacted accordingly, with the yield on 10-year Treasuries falling slightly to 4.26% and 30-year Treasuries rising to 4.9%.
Adding to the market uncertainty, Trump also vowed to impose new tariffs and export restrictions on chips and technology from nations he deems to have unfairly taxed US digital services.
This aggressive trade stance threatens to escalate further tensions with the European Union, which has defended its use of such taxes. The potential for retaliatory measures and a wider trade war weighs heavily on investor sentiment.
Meanwhile, the tech sector is focused on Nvidia’s upcoming earnings report, which is expected to be released on Wednesday after the closing bell. Despite significant restrictions on chip sales to China, which could potentially cost the company billions, Nvidia’s stock has surged nearly 34% this year, reflecting high expectations for its financial performance. The company’s results are likely to influence market sentiment, particularly in the technology sector, significantly.
