[New York Stock Market] Mixed Close on First Day of Reciprocal Tariffs... Nasdaq Rises on Semiconductor Tariff Exemptions

Reciprocal Tariffs by Country Take Effect on the 7th... Market Relatively Unfazed
Trump Announces 100% Tariff on Semiconductors
Exemptions Suggested for Companies Producing in the U.S.; Semiconductor Stocks Rise
Continuing Jobless Claims Hit Highest Level in 3 Years and 8 Months
Stephen Miran Appointed as Fed Governor; Term Until January Next Year

On August 7 (local time), the three major indices on the New York Stock Exchange ended mixed, hovering near the flatline on the first day of the reciprocal tariff announcement. Amid perceptions that the impact of the tariffs would be limited, investors focused more on taking profits from recent stock gains rather than on trade uncertainties. In contrast, due to broader-than-expected semiconductor tariff exemptions, related stocks performed strongly, resulting in a slight rise in the Nasdaq index alone.

AFP Yonhap News

On this day, the blue-chip Dow Jones Industrial Average closed at 43,968.64, down 224.48 points (0.51%) from the previous session. The large-cap S&P 500 index fell by 5.06 points (0.08%) to 6,340, while the tech-heavy Nasdaq index rose by 73.27 points (0.35%) to 21,242.7. Early in the session, the S&P 500 and Nasdaq indexes climbed on the back of semiconductor tariff exemptions, but later gave up gains or turned negative as profit-taking set in following the recent rally.

The market's attention was focused on the semiconductor tariff exemptions. President Donald Trump stated the previous day that he would impose a 100% tariff on semiconductors entering the United States, but also announced broad exemptions for companies that have established, or have made firm commitments to establish, production bases in the United States. As a result, semiconductor-related stocks gained, partially supporting investor sentiment.

On the other hand, investors reacted relatively calmly to the reciprocal tariffs by country that took effect on this day, not regarding them as a significant new factor.

Anthony Saglimbene, chief market strategist at Ameriprise, commented, "There is a lot for the market to digest right now regarding tariffs and trade, and several complex macroeconomic situations are unfolding." He added, "The market tends to set aside issues that do not immediately have a negative impact on the economy or corporate earnings, and this is one of those times." He continued, "The market remains focused on the solid economic backdrop and strong earnings, and will maintain this stance until more evidence emerges regarding the impact of tariffs. The effects of President Trump's tariffs are expected to start appearing in economic indicators around the fall."

Recently weakening employment data was a key focus for investors. According to the U.S. Department of Labor, the number of continuing jobless claims?those claiming unemployment benefits for more than two weeks?stood at 1,974,000 for the week of July 20-26, an increase of 38,000 from the previous week's 1,936,000. This not only exceeded the market estimate of 1,950,000 by a wide margin but also marked the highest level since November 2021. Initial jobless claims also rose, reaching 226,000 for the week of July 27 to August 2, surpassing both the previous week's figure of 219,000 and the market expectation of 221,000. This trend aligns with the disappointing July nonfarm payrolls data released on August 1, which showed an increase of only 73,000 jobs, far below the forecast of 106,000. Some analysts suggest that aggressive tariff policies and the resulting economic uncertainty are causing companies to hesitate in new hiring, leading to an overall slowdown in the labor market.

Meanwhile, President Trump officially nominated Stephen Miran, chairman of the White House Council of Economic Advisers (CEA), as interim governor of the Federal Reserve (Fed) on this day. Miran will succeed Adriana Kugler, who recently resigned early, and will serve for the remainder of Kugler's term until January 2026. As a result, the number of 'pro-Trump' members among the 12 voting members of the Federal Open Market Committee (FOMC), which sets monetary policy, will increase to three, further strengthening the case for interest rate cuts within the Fed.

U.S. Treasury yields remained firm. The benchmark 10-year U.S. Treasury yield, a global bond market indicator, rose by 1 basis point (1bp = 0.01 percentage point) to 4.24%, compared to the previous session's 4.23%. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, rose by 3 basis points from the previous day to 3.73%.

By stock, U.S. heavy equipment maker Caterpillar fell 2.47% after concerns about the impact of tariff policies on its business. In contrast, semiconductor stocks were strong. AMD rose 5.69%, and Nvidia gained 0.75%. However, Intel dropped 3.14% after President Trump called for the resignation of CEO Lip-Bu Tan, who is of Chinese descent, amid allegations that he posed a national security threat to the United States due to ties with China. Apple, which surged 5.1% the previous day after announcing an additional $100 billion investment in the United States, rose another 3.18% on this day.