S&P 500, Nasdaq advance ahead of Fed minutes; markets analyze Trump's tariff threats

By Johann M Cherian and Purvi Agarwal

(Reuters) - The benchmark S&P 500 and the Nasdaq extended recent gains on Tuesday, as technology stocks rebounded, while investors parsed Donald Trump's tariff pledges on top trade partners and awaited minutes from the Federal Reserve's latest meeting.

President-elect Trump said he would impose a 25% conditional tariff on Canadian and Mexican imports that could violate a free-trade deal he negotiated during his previous term. He also outlined "an additional 10% tariff, above any additional tariffs" on imports from China, raising the risk of trade wars.

Automakers such as Ford (NYSE:F ) and General Motors (NYSE:GM ) -that have highly integrated supply chains across Mexico, the U.S. and Canada - lost 2.8% and 7%, respectively.

However, some analysts said that the threats might just be used as a negotiating tool.

"At this point it's probably too early to tell. But I don't think it's something that is over and I wouldn't be shocked if we turn the new year and all of a sudden this becomes a big issue," said Joe Saluzzi, co-head of equity trading at Themis Trading.

At 9:42 a.m. ET, the Dow Jones Industrial Average fell 197.32 points, or 0.44%, to 44,539.25, the S&P 500 gained 11.76 points, or 0.20%, to 5,999.13 and the Nasdaq Composite gained 81.01 points, or 0.43%, to 19,135.84.

Gains in megacaps such as Nvidia (NASDAQ:NVDA ), Microsoft (NASDAQ:MSFT ) and Apple (NASDAQ:AAPL ) boosted the information technology sector and also the tech-heavy Nasdaq.

The blue-chip Dow was weighed down by declines in Amgen (NASDAQ:AMGN ), which lost 11.5% after its experimental obesity drug fell short of expectations.

Yields on Treasury bonds, that had slipped in the previous session following Scott Bessent's selection as incoming Treasury secretary, rose and kept a lid on equities' gains.

The S&P 500 touched a record high on Monday and logged its sixth-straight session of gains, while the Russell 2000 also scaled an all-time high after three years. On the day, the small-cap index was down 0.4%.

Minutes from the central bank's meet earlier this month will be in focus on the day. Top on the radar this week is the personal consumption expenditure report due on Wednesday.

Analysts say Trump's trade and fiscal policies, though seen as a positive for companies and economic growth, could stoke inflation pressures and slowdown the Fed's monetary policy easing cycle.

Minneapolis Federal Reserve President Neel Kashkari, typically seen as hawkish on monetary policy, said he is open to cutting interest rates again next month.

Traders have recently swayed in placing their bets on the central bank's move in December and currently favor a 25-basis point interest rate cut by a 56.2% chance, as per the CME Group's (NASDAQ:CME ) FedWatch Tool.

Among others, Eli Lilly (NYSE:LLY ) rose 3.7% after U.S. President Joe Biden was set to propose expanding Medicare and Medicaid coverage for anti-obesity drugs.

Best Buy (NYSE:BBY ) lost 8.8% and was among top decliners on the S&P 500 after trimming its annual profit and sales forecasts.



Declining issues outnumbered advancers by a 2.12-to-1 ratio on the NYSE and by a 1.62-to-1 ratio on the Nasdaq.

The S&P 500 posted 26 new 52-week highs and three new lows, while the Nasdaq Composite recorded 45 new highs and 29 new lows.

Source: Investing.com