US stocks on Tuesday dismissed Donald Trump’s warning considering the potential imposition of new tariffs on Canada, China and Mexico with two major indexes achieving new record highs.
The S&P 500 (^GSPC) has increased by around 0.6% reaching a record closing value, whereas the technology-focused Nasdaq Composite (^IXIX) also rose around 0.6%. The Dow Jones Industrial Average (^DJI) already recovered from earlier declines to end the day up about 0.3% which was another consecutive record.
Throughout much of the day, the index faced pressure after a significant drop of up to 12% in shares of drugmaker Amgen (AMGN) because of disappointing weight-loss data. By the conclusion of the trading session, the shares had reduced their losses to around 5%.
Initially, the markets were taken aback by the commitment which was made by Trump late Monday to impose substantial tariffs on the United States’s latest trading partners on the first day of his office.
His remarks heightened concerns over a potential trade war and undermined Wall Street’s optimism that Treasury Secretary nominee Scott Bessent would mitigate any drastic actions from the new administration.
Automobile stocks, both domestic as well as international experienced a decline in response to Trump’s agenda of ‘America First’. Companies such as Nissan (7201.T) and Honda Motor (HMC), which operate its manufacturing facilities in Mexico faced pressure alongside Ford (F), Stellantis (STLA) and General Motors (GM).
In addition to the tariff concerns, investors also considered the release of the minutes from the Federal Open Market Committee meeting that concluded on the 7th of November. It indicates that the officials favoured a gradual approach to the interest rate reductions while the economy remained robust.
Some officials have also expressed that a resurgence of persistent inflation with a downturn in the labour market could also compel the central bank to stop its easing cycle.
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