WSJ and Bloomberg Report
"Item-Specific Tariffs Delayed, Scope of Reciprocal Tariffs Narrowed"
Trump Also Mentions "Flexibility"
S&P March Composite PMI at 53.5... Manufacturing Down
This Week's Focus: February PCE Price Index and Consumer Confidence Index
The three major indices of the U.S. New York stock market are rising in early trading on the 24th (local time). Relief is spreading following reports that President Donald Trump will narrow the scope of tariffs to be announced on the 2nd of next month and target countries subject to reciprocal tariffs. After breaking a four-week decline and rebounding last week, the market is seeing buying momentum centered on tech stocks amid expectations to confirm the stock price bottom.
As of 9:55 a.m. in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks is trading at 42,489.58, up 504.23 points (1.2%) from the previous trading day. The S&P 500 index, centered on large-cap stocks, is up 83.15 points (1.47%) at 5,750.71, and the tech-heavy Nasdaq index is up 333.39 points (1.87%) at 18,117.44.
By stock, tech stocks are soaring. U.S. electric vehicle maker Tesla is surging 7.59%. Meta, the parent company of Facebook, is up 4.06%, and AI leader Nvidia is up 1.94%. U.S. semiconductor design company AMD and AI platform company Palantir are rising 3.42% and 5.29%, respectively.
The New York stock market ended a four-week losing streak last week and successfully turned to an upward trend, continuing the rebound early this week. Reports that the Trump administration will narrow the scope and targets of tariffs to be announced on April 2nd acted as a catalyst for the market rise. The Wall Street Journal (WSJ) reported the previous day that the Trump administration decided to postpone item-specific tariffs and focus on imposing reciprocal tariffs first. Initially, President Trump had announced that he would simultaneously announce item-specific tariffs on automobiles, semiconductors, and reciprocal tariffs on April 2nd.
Bloomberg News reported that Trump will exclude some countries from tariffs. It is expected that the Trump administration will focus reciprocal tariffs on the so-called 'Dirty 15' countries with large U.S. trade deficits, including South Korea. President Trump also stated on the 21st regarding reciprocal tariffs, "There will be flexibility, but basically it is reciprocity," and this mention of 'flexibility' is analyzed to have partially eased investors' concerns.
Tobin Marcus, head of U.S. policy and political research at Wolfe Research, said, "If item-specific tariffs are excluded from the April 2nd (tariff) package, both the total scale of tariffs and the maximum tariff rate will significantly decrease and decline," adding, "The cap on reciprocal tariffs on April 2nd is still dramatic and a negative market reaction is expected, but the scale will not be severe, and the impact on specific items will not be so concentrated."
As the announcement of reciprocal tariffs approaches next week, Wall Street is paying close attention to whether the Trump administration will reveal additional hints related to this during the week.
While the U.S. service sector is expanding, the manufacturing sector is contracting. The comprehensive Purchasing Managers' Index (PMI) for March, released by S&P Global this morning, stood at 53.5, significantly exceeding the February figure of 51.6. A PMI above 50 indicates economic expansion, while below 50 indicates contraction. The service sector PMI rose to 54.3, surpassing both the forecast (51.2) and February's figure (51.0), driving the overall PMI higher. Conversely, the manufacturing PMI fell from 52.7 in February to 49.8 in March, signaling a shift to contraction. It also fell well below the market forecast (51.9), indicating that the manufacturing sector is contracting faster than expected.
Several other major economic indicators will be released this week. The most important is the core Personal Consumption Expenditures (PCE) price index for February, to be released by the U.S. Commerce Department on the 28th. According to Bloomberg's forecast, the core PCE price index is expected to rise 2.7% year-over-year, up from 2.6% in January. Prior to that, the Conference Board's (CB) consumer confidence index for March will be released on the 25th. Weekly initial jobless claims, showing labor market conditions, and the finalized GDP growth rate for Q4 last year will be released on the 27th.
Public remarks by Federal Reserve (Fed) officials will continue this week. Starting with a speech by Raphael Bostic, president of the Atlanta Fed, today, major Fed figures including John Williams, president of the New York Fed; Neel Kashkari, president of the Minneapolis Fed; and Thomas Barkin, president of the Richmond Fed, are scheduled to speak.
U.S. Treasury yields are rising. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 4 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.29%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, remains at the previous day's level of 3.99%.
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