The delays have provided some relief to Wall Street, though uncertainty about the impact from current and future tariffs continues to hang over markets and the economy.
“Uncertainty remains elevated and economic data will likely weaken in the coming months, meaning further bouts of volatility are likely,” said Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.
That uncertainty will overshadow the Federal Reserve’s meeting this week.
The Fed is expected to hold its benchmark interest rate steady on Wednesday. It cut the rate three times in 2024 before taking a more cautious stance. The central bank was concerned that inflation, while easing, was still stubbornly hovering just above its target rate of 2 per cent. Concerns about inflation reigniting have only grown amid the global trade war sparked by Trump’s tariff policy.
The economy has shown some signs that it is feeling the impact from tariffs and the uncertainty over Trump’s policy. The US economy shrank 0.3 per cent in the first quarter, marking the first drop in three years.
The US economy is still showing signs of resilience, however. Consumers have grown more cautious, but still continue to spend. Economic activity in the services sector continued expanding in April, according to a survey from the Institute for Supply Management.
The services sector survey and the latest consumer confidence updates also reflect growing concerns over the economy’s direction. Trump’s rapidly shifting policies on trade have kept the Fed and markets on edge.
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Tariffs have been imposed, only to be pulled or delayed, sometimes on a daily basis. The on-again-off-again approach has left businesses, households and economists at a loss in trying to forecast where the economy might be headed and planning accordingly.
The latest salvo in the trade war from Trump came Sunday night in a post on his Truth Social platform. He said he has authorised a 100 per cent tariff on movies that are produced outside of the US. The impact is unclear, as it is common for films to include production at multiple locations around the world.
Netflix slumped 1.5 per cent and Warner Bros. Discovery fell 1 per cent.
Shoemakers posted gains following the announcement that Skechers is being acquired for $9 billion and taken private by the investment firm by 3G Capital.
Skechers jumped 24.4 per cent, while Crocs rose 3.9 per cent. Deckers Outdoor, which owns the Ugg and Teva brands, rose 2.6 per cent.
Treasury yields rose. The yield on the 10-year Treasury rose to 4.36 per cent from 4.31 per cent late Friday.
AP
