Volatility has gripped US markets in recent weeks as investors speculated about the scope of tariffs and their impact on the global economy, inflation and corporate earnings.
Some tariffs, including on steel, aluminium and autos, have already been announced, although the main thrust of Trump’s tariff policy is set to be unveiled during a White House Rose Garden ceremony scheduled for 4pm.
Investors are watching for greater details on what specifically will attract tariffs as well as for the process for implementing them. Reports have indicated Trump was considering a 20% universal tariff.
Investors have, generally, adopted a risk-off approach in the days leading up to the announcement, although gains across all three benchmarks on Wednesday afternoon pointed to the pessimistic tone being overdone, according to Phil Pecsok, founder and chief investment officer of Anacapa Advisors.
“We made the call about a week ago that Wednesday morning was going to be the lows, and it is looking like we are going to be right,” he said, adding he felt like the tariff news had already been priced in and the market was oversold.
He noted that while there was always a possibility of the market surprising people, his view was there would likely be a short-term bounce which pushes the S&P 500 roughly 7-8% higher, and back towards the 6,000 mark.
At 1.55pm Eastern Time, the S&P 500 had risen 27.29 points, or 0.48%, to 5,660.36 points, while the Nasdaq Composite had gained 138.13 points, or 0.79%, to 17,588.03. The Dow Jones Industrial Average was up by 141.60 points, or 0.34%, to 42,131.56.
Big-tech names offered support to benchmarks on Wednesday, maintaining the previous session’s upward momentum.
Tesla jumped 5.4%, reversing early declines after Politico reported that Trump has told members of his Cabinet and other close contacts that his billionaire ally Elon Musk will soon step back from his government role.
In early trade, Tesla fell as much as 6.4% after the EV maker reported a 13% drop in first-quarter deliveries.
Its advances also helped the consumer discretionary index to a 2.1% increase, making it the best performing of the 11 S&P sectors.
Among other Magnificent Seven names, Amazon.com rose 2.3% after the New York Times reported it was bidding for short video platform TikTok.
On the data front, US private payrolls growth accelerated in March and new orders for US-manufactured goods increased solidly in February, likely as businesses front-loaded orders ahead of tariffs.
Focus is on the crucial monthly non-farm payrolls data as well as Federal Reserve chair Jerome Powell’s speech on Friday for insights into the health of the US economy and trajectory of interest rates.
Traders are betting on three rate cuts from the Fed this year but the prospect of tariff-induced inflationary pressures has clouded the outlook.
Among the newest public companies, CoreWeave continued its recovery from a rocky first two trading days, with the artificial intelligence startup building on the previous session’s gains with a 5% advance.
However, conservative news provider Newsmax, which had posted triple-digit percentage gains on its first two days, retreated with a 62% decline.