Markets Start Tepid as Trade Tensions Resurface
US stocks moved in a tight range on Tuesday as renewed trade tensions with China again rattled investors. The S&P 500 edged higher by 0.2% in afternoon trading, after sliding as much as 1.5% earlier in the day. Tech stocks, which carry outsized values within the index, helped cap losses elsewhere, keeping the broad market from a deeper decline.
The S&P 500 and the broader market have been caught in a back-and-forth pattern lately, with investors reassessing the impact of tariff policy shifts, global supply chains, and earnings outlooks. The Dow Jones Industrial Average rose about 309 points, or 0.7%, while the Nasdaq Composite dipped around 0.2% as heavier tech-weighted components fluctuated with the mood on tariff talks and demand for semiconductors.
Tech Stocks, Trade News Drive the Day
Technology shares, which often reflect the health of global supply chains and consumer demand in large markets like China, continued to be a major source of volatility. Semiconductor makers, personal-computer and data-center stocks were among the hardest hit, with Nvidia slipping about 2.6% following the latest round of trade-related headlines. The sector’s sensitivity to U.S.-China relations means swings in sentiment tend to translate into bigger moves for the Nasdaq and the broader market.
International tensions intensified after China’s Commerce Ministry announced restrictions on dealings by Chinese firms with five subsidiaries of South Korea’s Hanwha Ocean. Market observers say the move taps into the larger strategic debate surrounding shipping, manufacturing, and the globalization of supply chains—areas where U.S.-China policy weighs heavily on investor confidence.
Earnings, Economic Data in Focus
With the U.S. government shutdown limiting the usual stream of inflation, spending, and employment data, investors are leaning more on company earnings to gauge the economy’s trajectory. Analysts expect forthcoming results to help determine whether equities look reasonably valued after a run-up in prices that some traders say outpaced corporate profits.
Profit reports have offered a mixed but supportive backdrop so far. Banks pushed out some of the market’s strongest results in recent weeks, hinting at resilient profitability. JPMorgan Chase, for example, slipped 1.3%, while Wells Fargo rose about 7.6% and Citigroup gained roughly 4.3% in early trading. In health care, Johnson & Johnson fell around 1.1% after signaling plans to spin off its orthopedics unit.
The Fed’s Path Forward and Interest Rates
With data gaps complicating the Federal Reserve’s policy calculus, investors are parsing the central bank’s likely path. After a September rate cut, the Fed signaled a cautious approach to inflation and employment, hinting at potential easing as needed but also acknowledging the upside risks to jobs. Powell suggested on a recent briefing that downside risks to employment have risen, complicating the balance of supporting payrolls while keeping inflation grounded.
Trading on Tuesday also reflected steady Treasury yields, with the 10-year note around 4.03%, near levels seen late last week. Bond markets were closed on Monday for a holiday, limiting intraday context for fixed-income moves.
What’s Ahead for Investors
As markets ride the wave of headlines from U.S.–China relations to corporate earnings, investors will be watching for clues about how tariffs, supply chains, and consumer demand shape the path of equities in the coming weeks. Analysts caution that if tariffs tighten again or if retaliation escalates, the risk of further volatility could rise, even as some sectors may still present opportunities for upside surprises.
Overall, the mood remains cautiously optimistic that both sides will move toward negotiated resolutions given the high economic stakes involved. While the domestic economy has shown resilience, the global nature of trade means U.S. stock performance will continue to hinge on developments in the world’s two largest economies.
AP News writers contributed to this report.
