[New York Stock Market] All Stocks Close Higher... 'Rollercoaster' Ahead of Reciprocal Tariffs

Trump Announces Reciprocal Tariffs After Market Close
WSJ: "Three Plans Discussed, Including Universal Tariff"
Market Holds Its Breath Amid Fears of a Global Trade War

The three major indices of the U.S. New York stock market all closed higher on the 2nd (local time). Immediately after the market closed at 4 p.m. that day (5 a.m. on the 3rd Korean time), all eyes of investors were focused on President Donald Trump's announcement of reciprocal tariffs, and the market experienced a rollercoaster session with fluctuations throughout the day.

Reuters Yonhap News

On that day in the New York stock market, the Dow Jones Industrial Average (Dow Index), centered on blue-chip stocks, closed at 42,224.89, up 234.93 points (0.56%) from the previous trading day. The S&P 500 Index, focused on large-cap stocks, rose 37.73 points (0.67%) to 5,670.8, and the Nasdaq Index, centered on tech stocks, gained 151.15 points (0.87%) to close at 17,601.05.

All market attention was focused on the reciprocal tariffs outlined that day. President Trump was scheduled to announce reciprocal tariffs targeting the entire world at 4 p.m. in the White House Rose Garden. Reports from The Wall Street Journal (WSJ) and others indicated that three options were under consideration: Plan 1 (universal tariff) imposing a uniform 20% tariff on all imports; Plan 2 (reciprocal tariffs) applying different rates to each country based on their tariff rates against the U.S.; and Plan 3 (compromise plan) imposing tariffs on exports from certain countries. However, the final plan remained uncertain until the last moment. Bloomberg reported that as of the previous day, President Trump had not yet made a final decision.

President Trump is expected to implement the reciprocal tariffs immediately upon announcement and then engage in individual trade negotiations with each country. U.S. Treasury Secretary Scott Baesant told lawmakers that the reciprocal tariffs would serve as a "cap." This suggests a policy of 'tariffs first, negotiations later' by imposing tariffs first and then negotiating with countries.

After the reciprocal tariff announcement, President Trump is also expected to sequentially announce item-specific tariffs on semiconductors, pharmaceuticals, and lumber, as previously indicated. Local media reports suggest that copper tariffs could also be formalized within weeks. As the Trump-initiated tariff war expands into a global full-scale conflict rather than targeting specific countries or products, reciprocal tariffs mark not an 'end' but another 'starting point.' Concerns about global trade wars, including retaliatory tariffs and the spread of protectionism, are also growing.

Mayungyu, Chief Investment Officer (CIO) of BMO Wealth Management, said, "The entire market is anxiously waiting to gauge how severe the tariff war will be and how much damage it will cause to the economy and corporate earnings."

By individual stocks, U.S. electric vehicle maker Tesla rose 5.33% despite weak vehicle sales in the first quarter of this year. Tesla announced that its vehicle deliveries in Q1 reached 336,681 units, down 13% year-on-year, marking the lowest level since Q2 2022. The growing backlash against Elon Musk, Tesla CEO and head of the Department of Government Efficiency (DOGE), known as President Trump's 'First Buddy,' is cited as a major reason for the weak vehicle sales. The reorganization of global factory operations to upgrade the flagship 'Model Y' also contributed to reduced production. Nvidia rose 0.25%, Apple increased 0.31%, and Meta, Facebook's parent company, fell 0.35%.

Government bond yields are rising. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 2 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.17%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, increased 5 basis points to 3.91%.