(Bloomberg) — Wall Street’s mood remained bound to the repercussions of Donald Trump’s trade war, with stocks moving away from session lows amid hopes the US will strike deals with some top commercial partners soon.
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As investors awaited any breakthroughs in tariff talks, the S&P 500 trimmed about half of a slide that earlier topped 1%. Trump said he will be making a “big announcement” before his trip to the Middle East — though he did not say what it will be about. Treasury Secretary Scott Bessent said many countries have good offers, while the Financial Times reported the UK and the US are set to sign a deal this week.
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A solid $42 billion sale of 10-year Treasuries helped alleviate concerns about demand for US assets, spurring gains in the bond market. Both the Mexican peso and Canadian dollar rose as Trump said the USMCA is “very effective” and he doesn’t know if it’s necessary to renegotiate the trade deal anymore.
“While we expect trends to weaken in the coming months once higher-priced tariffed goods start to hit shelves, we believe markets are likely to look through near-term economic weakness amid signs of progress on trade negotiations,” said Mark Haefele at UBS Global Wealth Management.
Yet following a historic winning run for stocks, Goldman Sachs Group Inc. strategists say current valuations leave little room for the recent rally to continue. For JPMorgan Chase & Co. strategists, US assets are “not a good place to hide.” At HSBC, Max Kettner remains tactically cautious as “fundamentals remain dire.”
In the run-up to Wednesday’s Federal Reserve decision, traders widely expect policymakers to stay on hold. While Trump has been ratcheting up pressure on the central bank to resume cutting rates, officials have mostly emphasized a need to wait and see how trade policies implemented last month affect the economy.
The S&P 500 fell 0.5%. The Nasdaq 100 slid 0.7%. The Dow Jones Industrial Average dropped 0.7%. Traders also kept an eye on the impacts of Germany’s parliament vote, with the DAX Index trimming losses after conservative leader Friedrich Merz secured backing as the new chancellor on the second attempt.
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