Wall Street Posts Gains as New Trade Rumors Swirl
All three of Wall Street’s benchmark indexes closed higher for the second consecutive day on Wednesday, reflecting investor optimism that the trade war(s) between the United States and its major trade partners would subside. Rumors swirled on Wednesday that U.S. President Donald Trump would delay his planned tariffs on the automobile industry, which would directly harm his relations with the European Union and Japan.
The deadline for whether fresh tariffs will be placed on cars and car parts is this coming Saturday. Failure to impose fresh tariffs at that time will allow for the decision to be extended for another 180, provided that the U.S. continues to negotiate with its trade partners. Trump has long maintained that tariffs are an effective way of gaining leverage over his trading partners, a term that his critics would contend means bullying other global powers into submission. The delay on automotive tariffs was supported by lawmakers from both the Republican and Democratic parties who feared that additional tariffs would shake the already volatile global economy. A delay on these tariffs would also be welcomed by investors who remain cautious as the U.S. continues to work on a trade deal with China.
The Dow Jones Industrial Average closed up 0.45 percent on Wednesday after plummeting as much as 190 points during the trading session, followed by the S&P 500 which posted gains of 0.58 percent. The NASDAQ saw the strongest daily gains, closing up 1.13 percent on the day. The indexes were buoyed by the trade rumors (which were published by both CNBC and Bloomberg News, among other outlets), as well as strong performance by Alphabet and Boeing, both of which have been struggling lately.
Tempering optimism was the news that U.S. retail sales slumped 0.2 percent in April despite forecasts for an increase of 0.2 percent.