[New York Stock Market] Rising Despite Tariff Concerns and Cautious Rate Cut Talks... S&P Hits Highest Level for Two Consecutive Days

FOMC Minutes Signal Rate Cuts on Hold as Expected
"Trade and Immigration Policies Could Disrupt Disinflation"
Trump Announces Tariffs Over 25% on Cars, Semiconductors, and Pharmaceuticals

The three major indices of the U.S. New York Stock Exchange closed higher on the 19th (local time). The Federal Reserve (Fed) reaffirmed its cautious monetary easing stance, and despite President Donald Trump continuously imposing 'tariff bombs,' the market showed resilience by shaking off the expected factors.

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 44,627.59, up 71.25 points (0.16%) from the previous trading day. The large-cap-focused S&P 500 index rose 14.57 points (0.24%) to close at 6,144.15, marking a record high for the second consecutive day. The tech-heavy Nasdaq index closed at 20,056.25, up 14.99 points (0.07%).

Investors paid close attention to the minutes of the January Federal Open Market Committee (FOMC) released that afternoon. The minutes stated that the current policy is "considerably less restrictive" than before the rate cuts and that "participants indicated they want inflation to make further progress before adjusting the federal funds rate target range again, assuming the economy remains close to maximum employment." As expected, the FOMC minutes reaffirmed Fed Chair Jerome Powell's monetary policy stance expressed last week before Congress that "there is no need to rush into further rate cuts."

The minutes also reflected concerns about the possibility that President Trump's tariff policies could drive inflation higher. The minutes noted, "Potential changes in trade and immigration policies, including strong consumer demand impacts, were mentioned as other factors that could disrupt the disinflation process (slowing inflation)." Furthermore, it explained that "businesses in several regions said companies would try to pass on increased input costs caused by potential tariffs to consumers," and policy officials "generally pointed to upside risks to inflation outlooks."

Since taking office, President Trump has imposed a series of tariff measures. He announced an additional 10% tariff on all Chinese imports and a 25% tariff on all steel and aluminum products entering the U.S. The day before, he announced new tariffs of 25% on automobiles and over 25% on semiconductors and pharmaceuticals, effective April 2.

Peter Bookba, Chief Investment Officer (CIO) of Blickley Financial Group, diagnosed, "They (the Fed) will sit and wait before cutting rates again, but they still seem to be easing-biased."

The market is pricing in over a 50% chance that the Fed will either hold rates steady or cut rates once this year. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on that day reflected a 17.1% chance of the Fed holding rates steady, a 36.2% chance of one rate cut, and a 30.4% chance of two rate cuts this year.

There are also observations that stock market volatility could increase depending on future tariff policies and inflation conditions.

Craig Johnson, Senior Market Technician at Piper Sandler, said, "The stock market's resilience this year has been impressive as investors faced negative sentiment and concerns about tariffs and inflation but refused to retreat. As investors rotate out of weakness amid falling Treasury yields, weaker oil prices, and a declining U.S. dollar, market volatility is expected to continue."

Following the release of the January FOMC minutes, Fed officials are scheduled to deliver speeches the next day. Public speeches are planned by Austan Goolsbee, President of the Federal Reserve Bank of Chicago; Philip Jefferson, Fed Vice Chair; Michael Barr, Fed Vice Chair for Supervision; and Adriana Kugler, Fed Board member. New weekly jobless claims data will also be released on the same day.

U.S. Treasury yields were slightly lower. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell slightly to 4.53%, and the 2-year U.S. Treasury yield, sensitive to monetary policy, declined by 2 basis points (1bp = 0.01 percentage points) to 4.27%.

By individual stocks, Microsoft (MS) rose 1.25%. MS attracted buying after announcing the development of its own quantum computing chip, 'Mayolina 1.' Electric truck manufacturer Nikola plunged 39.13% after filing for bankruptcy protection due to management difficulties. Intel, which surged 16.06% the previous day on news of being split and sold to TSMC and Broadcom, gave up some gains by falling 6.1% that day.