[New York Stock Market] Mixed Close Ahead of Reciprocal Tariff Announcement... Increased Volatility

Trump to Officially Announce Reciprocal Tariffs at 4 p.m. on the 2nd
Market Volatility Increases Amid Tariff Uncertainty
Manufacturing PMI Contracts for the First Time in Three Months

The three major indices of the U.S. New York stock market closed mixed on the 1st (local time). Ahead of President Donald Trump's announcement on reciprocal tariffs scheduled for the next day, the market experienced a rollercoaster ride with repeated fluctuations. This reflects the market's heightened caution over the expansion of the global trade war.

AFP Yonhap News

On that day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 41,989.96, down 11.8 points (0.03%) from the previous trading day. The S&P 500 index, centered on large-cap stocks, rose 21.22 points (0.38%) to 5,633.07, and the Nasdaq index, focused on technology stocks, gained 150.6 points (0.87%) to close at 17,449.89.

By sector, consumer goods rose. U.S. electric vehicle maker Tesla jumped 3.59%, and Nike increased by 1.96%. General Motors (GM) was up 0.49%, while Ford showed a decline of 0.9%.

The manufacturing indicator released that morning showed weaker-than-expected results, reflecting tariff uncertainties. According to the Institute for Supply Management (ISM), the March Manufacturing Purchasing Managers' Index (PMI) fell 1.3 points from the previous month to 49.0. A reading above 50 indicates economic expansion, while below 50 signals contraction. This month's manufacturing PMI fell short of expert forecasts (49.5), marking a shift to contraction territory for the first time in three months.

Job openings also fell short of expectations. According to the Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor, job openings in February this year totaled 7.568 million, down 194,000 from the previous month (7.762 million). This was below market expectations (7.69 million), suggesting signs of easing in the labor market. However, the layoff rate remained steady at 1.1%, indicating no issues with labor market health. The number of job openings per unemployed person, closely watched by the Federal Reserve (Fed), remained at 1.1.

All eyes of investors are on the reciprocal tariff announcement scheduled for the 2nd. The White House announced that President Trump plans to deliver a speech titled "Making America Wealthier" at the Rose Garden at 4 p.m. on the 2nd (5 a.m. KST on the 3rd). This implies that the reciprocal tariff announcement will be made at this event. White House spokeswoman Caroline Levitt confirmed during a briefing that the reciprocal tariffs will take effect immediately upon President Trump's announcement on the 2nd. A 20% reciprocal tariff rate is being discussed. Earlier, the U.S. daily Washington Post (WP) reported, citing three sources, that the White House is considering imposing a 20% tariff on most products imported into the U.S. as one of the options.

Additionally, President Trump has announced plans to impose item-specific tariffs on semiconductors, pharmaceuticals, and lumber in the future. Copper tariffs may also be announced within weeks. Thus, reciprocal tariffs are not the 'end' but rather another 'beginning' of the tariff war.

Due to tariff uncertainties, the New York stock market has been on a rollercoaster. The previous day, the S&P 500 index fell to its lowest level in six months but rebounded as investors flocked to dividend stocks and technology stocks recovered their losses. The major indices' performance in the first quarter of this year was also weak. The S&P 500 index fell 4.6% during this period, and the Nasdaq index dropped 10%. Both indices recorded their largest quarterly declines since 2022. The Dow index fell 1.3% in the first quarter.

Jay Woods, Chief Global Strategist at Freedom Capital Markets, said, "The lack of certainty and the veil of secrecy have driven the market crazy," but added, "We have gone through a correction, so (going forward) perspective is important."

Laura Cooper, Global Investment Strategist at global asset management firm Nuveen, analyzed the reciprocal tariffs, saying, "Investors are wrestling with what might be announced this week," and "The range of possible outcomes is so broad that traders are struggling with how to price potential results."

Investors are closely watching President Trump's reciprocal tariff announcement while also awaiting a slew of employment data this week. On the 2nd, the ADP employment report for March, released by the private labor market research firm ADP, will be published, followed by the weekly initial jobless claims on the 3rd. The Department of Labor's March employment report, which includes both private and public sector employment and is a reliable indicator of overall labor market health, will be released on the 4th. Nonfarm payrolls are expected to increase by 139,000 this month, below February's figure of 151,000. The unemployment rate is expected to remain steady at 4.1%.

As investors flock to safe-haven government bonds, bond yields are weakening. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell sharply by 8 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.16%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, dropped 3 basis points to 3.87%.