S&P 500, Nasdaq climb 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 2.1% and 7.2%, respectively.

"The concern is that some products are going to become more costly and that will mean revenue for those companies that are possibly manufacturing those goods overseas is going to decline," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"It's a lot of back and forth right now because investors are trying to position themselves for January and the days after and they're not really sure."

At 11:32 a.m. ET, the Dow Jones Industrial Average fell 161.03 points, or 0.36%, to 44,575.54, the S&P 500 gained 21.45 points, or 0.36%, to 6,008.82 and the Nasdaq Composite gained 102.77 points, or 0.54%, to 19,157.61.

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

The blue-chip Dow was weighed down by declines in Amgen (NASDAQ:AMGN ), which slid 11% after its experimental obesity drug fell short of expectations.

Yields on Treasury bonds that 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 fell 0.6%.

Later in the day, investors will parse minutes from the central bank's meet earlier this month for any clues on its policy trajectory next year, ahead of Wednesday's personal consumption expenditure report.

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 5.9% after U.S. President Joe Biden was set to propose expanding Medicare and Medicaid coverage for anti-obesity drugs.

Best Buy (NYSE:BBY ) lost 6.9% and was among top decliners on the S&P 500 after trimming its annual profit and sales forecasts.



Declining issues outnumbered advancers by a 1.95-to-1 ratio on the NYSE and by a 1.49-to-1 ratio on the Nasdaq.

The S&P 500 posted 38 new 52-week highs and three new lows, while the Nasdaq Composite recorded 78 new highs and 66 new lows.

Source: Investing.com