Wall St dips after Trump’s latest tariffs threat fans inflation worries

NEW YORK: Wall Street’s main indexes slipped and the S&P 500 came off record highs on Wednesday as US President Donald Trump’s latest tariff threats raised the specter of higher inflation and markets awaited minutes from the central bank’s January meeting.

Trump said on Tuesday that he intended to impose auto tariffs “in the neighborhood of 25%”, along with similar duties on semiconductor and pharmaceutical imports.

Since his inauguration in January, Trump has imposed a 10% tariff on all imports from China, on top of existing levies. He also announced and subsequently delayed for a month 25% duties on goods from Mexico and non-energy imports from Canada.

Bob Savage, head of markets strategy and insights at BNY, said the blame for declining equities “goes back to Trump tariff talk”.

“But, the underlying logic of investors remains that tariffs are likely delayed and negotiated and so you can’t trade what you don’t know.”

Trump’s tariffs have raised concerns, with fears that they would fuel domestic inflation and weigh on the Fed’s stance on rate cuts this year.

Minutes from the US central bank’s January policy meeting - where voting members elected to let interest rates stand and Fed Chair Jerome Powell said there would be no rush to cut them again until inflation and jobs data made it appropriate - are scheduled to be released at 2 p.m. ET.

Investors will look for clues on the Fed’s rate plans for the year in the minutes, in light of last week’s mixed consumer and producer prices data, coupled with a sharp drop in retail sales, which had sent Treasury yields lower.

Traders currently see at least one 25-basis-point rate cut and a more than 47% chance of an additional lowering by December, according to LSEG data.

At 11:20 a.m. ET, the Dow Jones Industrial Average fell 141.25 points, or 0.32%, to 44,415.09, the S&P 500 lost 2.87 points, or 0.05%, to 6,126.77, and the Nasdaq Composite fell 23.28 points, or 0.12%, to 20,017.98.

Seven of the S&P 500’s 11 sectors traded lower, with materials leading declines with a 1.3% fall, while energy was the highest gainer with a 1.1% rise.

Nikola plunged 39% after the EV maker said it had filed for Chapter 11 bankruptcy protection. Specialty chemicals company Celanese slid 22.2% after reporting a quarterly loss.

Etsy lost 10.7% after the online marketplace missed Wall Street

Estimates for holiday-quarter revenue and gross merchandise sales.

US-listed shares of Garmin jumped 13% after the Swiss navigation device maker forecast full-year results above estimates.