[New York Stock Market] Mixed Close Amid Powell's Remarks and Trump Tariff Digest... Focus on June 12 CPI

Powell: "No Reason to Rush Additional Rate Cuts"
U.S. Remains Relatively Calm Despite Steel Tariff Hike Next Month
Focus on CPI Release on the 12th... Retail Sales Data Coming on the 14th

The three major indices of the U.S. New York stock market closed mixed near the flat line on the 11th (local time). Investors maintained a calm response to the 25% tariff policy on steel and aluminum officially announced the previous day by U.S. President Donald Trump, while digesting the remarks of Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), who reaffirmed a cautious stance on interest rate cuts that morning. As the market struggled to find a clear direction, the inflation and retail sales data for January, which will be released consecutively from the next day, are expected to determine the future trend of the stock market.

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On that day in the New York stock market, the Dow Jones Industrial Average (Dow Index), centered on blue-chip stocks, closed at 44,593.65, up 123.24 points (0.28%) from the previous trading day. The S&P 500 Index, focused on large-cap stocks, rose 2.06 points (0.03%) to 6,068.5, while the Nasdaq Index, centered on technology stocks, fell 70.41 points (0.36%) to close at 19,643.86.

Investors focused on Powell’s remarks during his appearance before the U.S. Senate for the semiannual monetary policy report. Powell stated, "We are in a fairly good position in the economy and want to make more progress on inflation," adding, "Our policy rate is in a good place, and there is no reason to rush additional rate cuts." This reaffirmed a cautious monetary easing policy. Earlier, the Fed began a monetary easing cycle in September last year, cutting rates three times from a peak of 5.25-5.5% to 4.25-4.5%, and then held rates steady for the first time last month. When asked about President Trump’s tariff policy, Powell avoided commenting, saying, "It is not the Fed’s role to make or comment on tariff policies." Regarding the possibility of Trump dismissing Fed members, he firmly stated, "That is clearly not legally permissible."

Powell’s congressional appearance came amid a flood of President Trump’s tariff policies. Trump signed a proclamation the previous day imposing a 25% tariff on all steel and aluminum products imported into the U.S. starting from February 12. He stated that no exceptions or exemptions would be granted. During his first term, Trump imposed a 25% tariff on steel products and a 10% tariff on aluminum products, but some countries, including South Korea, had been granted exceptions. Those countries are now unlikely to avoid the tariff bomb starting February 12.

He also hinted at imposing tariffs on semiconductors, automobiles, and pharmaceuticals. Trump said, "Over the next four weeks, we will probably have meetings (about tariffs) every week," and added, "In the coming weeks, we will look not only at steel and aluminum but also semiconductors, automobiles, pharmaceuticals, and a couple of other items." He also reaffirmed plans to impose "reciprocal tariffs," applying the same rates to foreign products as those imposed by other countries on U.S. products. The European Union (EU) has announced retaliatory tariffs.

Investors are awaiting key economic indicators to be released from the next day. The Consumer Price Index (CPI) for January will be released on the 12th, and the Producer Price Index (PPI) on the 13th. Last month’s CPI is expected to have risen 2.9% year-over-year, and the PPI 0.2% month-over-month, maintaining the previous month’s increase. January retail sales, to be announced on the 14th, are expected to have remained flat compared to the previous month, halting the growth trend. December retail sales had increased by 0.4% month-over-month.

Sam Stovall, Chief Investment Officer (CIO) of CFRA Research, analyzed, "The market is treading water after listening to Powell’s remarks and awaiting tomorrow’s CPI. Investors will raise (stock) prices if corporate earnings increase."

Concerns have also been raised that volatility in the stock market may increase due to President Trump’s tariff policies, suggesting an expansion of the proportion of safe-haven assets.

Christian Mueller-Glissmann, Head of Asset Allocation Research at Goldman Sachs, said, "The best approach in asset allocation is to find assets that can protect you," adding, "The biggest problem is that tariffs are very specific, so it will become much more difficult from now on."

By individual stocks, Coca-Cola rose 4.73% after reporting better-than-expected results for the fourth quarter of last year. U.S. Steel rose 1.45%, and Alcoa 0.68%, following the announcement of the 25% tariffs on steel and aluminum to take effect on February 12. U.S. automaker Ford fell 0.32%. On the day, Jim Farley, CEO of Ford, criticized President Trump’s tariffs, saying they "are causing a lot of costs and confusion."

Bond yields rose as Powell reaffirmed a cautious stance on rate cuts. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 4 basis points (bp) (1 bp = 0.01 percentage points) to 4.53% from the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, moved up 2 bp to 4.29%.