Stocks on Wall Street rise as US excludes allies from tariff plans
Stocks rose on Wall Street in another choppy day's trading as the White House provided further details of widely debated tariffs on steel and aluminium imports.
At the close in New York, the Dow Jones Industrial Average rose 93.85 points, or 0.4%, to 24,895.21. The Nasdaq added 0.4% to 7427.95 and the Standard & Poor’s 500 added 0.45% to 2738.97 27627.
Global stocks have gained some traction in recent sessions as investors have kept a close eye on the tariffs, which some fear could result in retaliatory measures from other countries.
President Donald Trump's decree of 25% tariffs on steel and 10% on aluminium will exclude allied countries, subject to negotiation. These will spare Canada and Mexico – which have a free trade agreement with the US – as well as Australia, which also has an FTA. Mr Trump says a "flexible" approach means the 25% and 10% numbers could be adjusted for specific countries.
The concessions helped stocks regain lost ground earlier in the session and put the major benchmarks on track for a weekly gain.
Nevertheless, investors believe volatility will continue with the eventual impact of the tariffs still unkown.
“We’re generally in a more volatile environment and the market will be sensitive to any headlines,” says Randy Warren, chief investment officer of Philadelphia-based Warren Financial.
Meanwhile, a flurry of corporate news drove swings in individual stocks.
Cigna shares fell 11% after the health insurer said it planned to buy Express Scripts, a St Louis-based pharmacy-benefit manager, for more than $US50 billion. Express Scripts shares jumped 8.6%.
Shares of supermarket chain Kroger tumbled 12% after it said its profits would suffer as it expands its e-commerce platform in competition with Walmart and Amazon.com.
Wynn Resorts jumped 7% after two members of the casino operator’s board said they would step down amid continuing investigations into alleged sexual misconduct by founder and former chief executive Steve Wynn.
Snap shed 1.8% following reports that the social media company is planning its third and largest round of layoffs since going public in 2017.
US government bond yields fell with the benchmark 10-year Treasury note dropping for the second time in three sessions, to 2.866% from 2.883% on Wednesday. The yield remains less than 0.1 percentage point below the high for the year of 2.943%.
European rates unchanged
The European Central Bank left interest rates unchanged but dropped a pledge to accelerate its bond purchases if the economy deteriorates. That step was expected by some analysts who see it as a further step toward monetary policy normalisation.
“They’re essentially signalling confidence in the economy and saying it’s time to take the training wheels off,” says Karyn Cavanaugh, senior market strategist at Voya Investment Management.
Yet even as central banks around the world signal they are moving toward normalising policy, stocks should continue to be able to eke out further gains, especially with corporate earnings looking robust, she says.
The Stoxx Europe 600 rose 1%, its fourth straight daily advance, supported by a rally in technology shares.
France’s CAC 40 rose 1.3%, Germany’s DAX gained 0.9% and the UK’s FTSE 100 rose 0.6%.
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