US stock rally cools after latest Trump tariff at start of Fed-decision week
US stock rally cools after latest Trump tariff at start of Fed-decision week
NEW YORK - The S&P 500 fell to snap its longest streak of gains in 20 years on May 5 as investors assessed US President Donald Trump's latest tariff announcement ahead of the Federal Reserve's monetary policy decision later this week.
On May 4, Mr Trump announced a 100 per cent tariff on movies produced outside the US but provided no details on how such levies would be implemented.
Stocks have been volatile since Mr Trump announced his first round of tariffs on April 2, with the S&P 500 initially dropping nearly 15 per cent, only to stabilise and climb for the last nine straight sessions through May 2, its longest streak since 2004.
On May 5, Treasury Secretary Scott Bessent said Mr Trump's tariff, tax-cut and deregulation agenda would work together to drive long-term investment to the US, adding markets could overcome any short-term turbulence.
'Nine up days in the S&P 500 is hard to maintain,' said Mr Art Hogan, chief market strategist at B Riley Wealth in Boston.
'We are starting to price in that eventuality of deals being announced, but we're running out of daylight on that because every week that goes by that we don't start cutting deals we're doing economic damage.'
The Dow Jones Industrial Average fell 98.60 points, or 0.24 per cent, to 41,218.83, the S&P 500 lost 36.29 points, or 0.64 per cent, to 5,650.38 and the Nasdaq Composite lost 133.49 points, or 0.74 per cent, to 17,844.24.
The Dow also snapped a nine-session win streak, its longest since December 2023.
Several movie and television production stocks fell sharply right after Mr Trump's announcement, but subsequently pared losses.
Netflix fell 1.9 per cent to snap an 11-session winning streak, while Amazon.com lost 1.9 per cent and Paramount Global was 1.6 per cent lower.
Energy, down 2 per cent, was the worst performer of the 11 major S&P sectors, after Opec+ decided to speed up its output hikes, causing concerns about more supply as demand remains uncertain.
Class B shares of Berkshire Hathaway stumbled 5.1 per cent after Mr Warren Buffett said he will step down as CEO of the conglomerate.
On the economic front, the Institute for Supply Management survey showed the services sector picked up growth in April, while a measure of prices paid by businesses for materials and services raced to the highest level in more than two years, indicating tariffs were causing inflation pressures to build.
Investors will closely eye the Fed's policy announcement on May 7, in which the central bank is largely expected to keep interest rates unchanged. Commentary from Fed Chair Jerome Powell will be scrutinized for signs of when the Fed will adjust monetary policy.
Markets are pricing in about 75 basis points of rate cuts by the Fed for 2025, with the first easing of at least 25 basis points likely at the central bank's July meeting, according to LSEG data.
Investors are also concerned about how tariffs may affect corporate profitability. Tyson Foods tumbled 7.7 per cent after the meat packer missed quarterly revenue expectations.
However, Skechers surged 24.3 per cent after the footwear maker agreed to be taken private by 3G Capital in a US$9.4 billion (S$12 billion) deal.
Declining issues outnumbered advancers by a 1.88-to-1 ratio on the NYSE and by a 1.79-to-1 ratio on the Nasdaq.
The S&P 500 posted nine new 52-week highs and three new lows, while the Nasdaq Composite recorded 53 new highs and 57 new lows.
Volume on US exchanges was 13.67 billion shares, compared with the 18.68 billion average for the full session over the last 20 trading days. REUTERS
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