Target falls after results
U.S. stocks swung between gains and losses on Tuesday as investors continued to debate the potential impact of a trade war in the wake of President Donald Trump announcing a pair of tariffs, a strategy that has received opposition from key Republicans like House Speaker Paul Ryan.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.54% slipped 85 points, or 0.4%, to 24,778. The S&P 500 SPX, -0.26% was down 5 points, or 0.2%, to 2,712. The Nasdaq Composite Index COMP, -0.14% was up 2 points to 7,332. All three opened higher but retreated from their highs of the session in midday trading.
Equity benchmarks are coming off a rally in the previous session, when they closed more than 1% higher in what some called a technical rebound after a stretch of weakness for equities.
What is driving the markets?
Trade continued to be a primary focus for investors, especially as Trump’s plan to impose tariffs on steel and aluminum imports showed signs of opposition. Speaker of the House Paul Ryan warned about the potential fallout if Trump pressed ahead—part of a show of resistance by some Republicans to the plan. In addition, Trump himself appeared to show some willingness to be flexible on trade tariffs with Canada and Mexico, if they agreed to a “fair” North American Free Trade Agreement.
Stocks have recently been pressured by the prospect of more protectionist trade policies, a headwind that contributed to heavy losses in the major U.S. indexes last week.
In a positive development, South Korea’s presidential office said that North and South Korea would hold their first summit in more than a decade in late April. That comes after North Korean leader Kim Jong Un met with a senior delegation from the South in Pyongyang and said he wanted to “write a new history of national reunification” for the two countries.
The reports said North Korea will suspend weapons testing during the summit and would be open to talks with the U.S. about scrapping nuclear weapons and normalize ties.
What are strategists saying?
“It was hard to evaluate what negative impact the Korea situation was having on the market, if any, but the possibility of war risk in Asia was the biggest uncertainty out there, and [the summit] could help eliminate that. Even if the risk seemed remote, that’s a net positive for the market,” said George Schultze, a hedge-fund manager and founder of Schultze Asset Management.
“Meanwhile, it seems like investors are starting to suspect that Trump’s tariff announcement could just be an opening gambit in his renegotiations over Nafta, so the threat may not be as bad as some are fearing.”
Despite that, he noted that “we’ve already seen a big run” in equities, suggesting further gains at current levels may be difficult to come by absent new positive news.
What’s on the economic lineup?
A group of Federal Reserve speakers will be watched by investors. Dallas Fed President Rob Kaplan said he still expects three interest-rate increases this year, and that he wants to get started soon. Recent volatility in the market has come as investors fret that inflation could be returning to the economy, and that the Fed could have to become more aggressive in combating such a scenario. However, most investors interpret a more aggressive stance as four rate increases this year.
After the market close, Fed Gov. Lael Brainard will speak on the economy and monetary policy at the Money Marketeers Forum in New York at 7 p.m. Eastern. Later, Kaplan will take part in a moderated discussion at CERA Week, an annual energy conference, in Houston at 8:30 p.m. Eastern.
What stocks are active?
Energy stocks were among the strongest, with the sector up 0.2%. The industry was supported by a 1.3% rise in the price of natural gas. Among the biggest gainers in the energy sector, Baker Hughes, a General Electric Co. BHGE, +0.29% rose 0.6% while Schlumberger Ltd. SLB, +0.02% was up 0.6%. Dow component Chevron Corp.CVX, +0.31% rose 1%.
What are other markets doing?
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