The US stock market showed resilience on Tuesday, with the Dow Jones Industrial Average and S&P 500 reaching new record highs despite concerns over proposed tariffs by President-elect Donald Trump. The Dow advanced 123.74 points, or 0.28%, to close at 44,860.31, while the S&P 500 gained 0.57% to end at 6,021.63. The Nasdaq Composite added 0.63% to finish at 19,174.30.
Trump recently announced plans for tariffs on products from Mexico and Canada, as well as an additional 10% levy on Chinese goods. However, investors appeared to look past the potential impact of these policies. Jamie Cox, managing partner at Harris Financial, stated, “Markets have become a lot more comfortable with the prospects of these tariffs being more bluster and negotiating tactics than actual implementation.”
While the broader market rose, certain stocks and funds struggled as investors evaluated the potential effects of Trump’s proposed policies.
Automaker shares fell, and shares of an alcohol company known for Mexican beers Corona and Modelo dropped more than 3%. Mexican President Claudia Sheinbaum Pardo indicated that her country would retaliate with tariffs on U.S. exports to Mexico, causing the Mexican IPC Index to shed over 2%. The economic outlook for next year will depend more on tariffs than on tax cuts, according to Gregory Daco, chief economist at EY-Parthenon.
Although the U.S. economy is robust and expected to grow at 2% in 2025, the implementation of Trump’s proposed tariffs could weigh more heavily on the economic forecast than any tax policy changes.
Resilient stock market despite tariffs
In company-specific news, Semtech shares surged nearly 17%, marking their best day since March 2020.
The semiconductor company exceeded Wall Street’s third-quarter estimates on both earnings and revenue, and provided strong guidance for the current quarter. Despite signs the stock market is trending toward being overbought, analysts remain bullish. Michael Welch from Canaccord Genuity advised in a note to clients that tactical indicators do not show “a cause for concern” even with the market trading near record highs.
Trade relations between the US and China deteriorated further after China announced it would ban exports of key high-tech materials to the US. This move follows the US Commerce Department’s expansion of its list of Chinese technology companies subject to export controls. Investors are awaiting significant updates on the US job market, including the October job openings report, weekly unemployment benefits data, and the November jobs report.
These reports could provide guidance for future economic support initiatives. The calm in US markets comes amid ongoing geopolitical tensions and investor anticipation of key economic data. The developments in US-China trade relations and upcoming job market reports will likely steer the market’s next moves.
