Stock Market Slump Continues, Tariffs Mostly to Blame
Because of continued tariff fears, the stock market is staying low and trading slowly, a situation that is likely to continue for a while.
Quick overview
- The stock market continues to decline, with the Dow Jones dropping 1.33% largely due to a significant loss in UnitedHealth stock.
- Analysts predict that stocks will remain low as concerns over President Trump's tariff policies persist.
- The Federal Reserve has refused to lower interest rates despite Trump's calls, maintaining a cautious stance on monetary policy.
- Investor confidence is shaken by the ongoing trade war with China, leading to increased caution in the stock market.
The further decline of the stock market came as little surprise as trading closed off last week. For the start of this week, the markets continue to look low as tariff fears persist.
The Dow Jones dropped 1.33% on Thursday, mostly due to the swift decline of UnitedHealth (UNH) stock. That healthcare company lost more than 22% of its stock value and brought down the entire Dow index. The S&P 500 gained 0.13% on Thursday, closing off a shortened holiday week, and Nasdaq lost 0.13%.
As the market prepares to open for Monday, analysts expect stocks to remain low. The Dow is unlikely to recover quickly from the UNH drop, and all three indices are feeling strain from President Donald Trump’s tariff policies.
No Lower Interest Rates for Now
Trump has called for the Federal Reserve to lower interest rates, but the Fed has refused. Fed’s chairman Jerome Powell has repeatedly spoken against lowering interest rates since Trump took office. Powell has reminded the public that there are still two scheduled interest rate cuts to come this year and likely no more than that.
Powell’s position could be in danger, since Trump has hinted that he may remove him. If that happens, the next appointed chairman may be more likely to issue interest rate cuts and follow Trump’s plans.
How Tariffs Are Affecting the Market
Stock indices continue to fall, primarily due to fears over tariffs. Investors are simply not sure how the trade war is going to affect the stock market, although all indications so far point to a negative impact overall. The United States is locked in a fierce battle over tariffs with China, one of its key trade partners. This battle has seriously affected the price of imports from China as well as how much money U.S. companies make from their exports.
Investors are wary about putting their money into the stock market when there is the possibility that it could all disappear as the trade war escalates. The market is not being helped by a record low for the dollar against the euro. Treasury yields and gold climbed higher, however, in response.
Many of President Trump’s new tariffs have been placed on a three-month pause, but even so, investors are cautious about playing the market at this tumultuous time. Both the long term and the short term outlook are less than promising
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