US stocks mixed as tariff concerns persist

New York Stock Exchange

After a sharp sell-off on Wednesday, traders were bullish on Thursday following comments from US President Donald Trump that there had been “big progress” in bilateral trade talks.

Mr Trump also told reporters he hoped to reach a trade deal with China, although he gave no indication of how negotiations would proceed between the world's two largest economies.

However, Mr. Trump's criticism of Fed Chairman Jerome Powell has not failed to worry investors. Accordingly, in a social media post on Thursday morning, Mr. Trump wrote: "Jerome Powell of the Fed, who is always too late and often makes mistakes, gave a report yesterday that was a total mess. He needs to be fired quickly." He said that the Fed should have cut interest rates sooner, like the European Central Bank (ECB). "Powell should have cut interest rates a long time ago, like the ECB. He certainly should have cut rates now," Mr. Trump wrote.

Commenting on the issue, Tom Bruce - macro investment strategist at Tanglewood Total Wealth Management said: "People know that Trump is not happy with Powell. The question is, will he try to do something about it?" He also noted that removing Powell would damage confidence in the US market.

The market wants Trump to announce trade deals, said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa. “The market wants tangible results, and that’s what the market isn’t getting,” he said.

In fact, what has caused the US stock market to plunge in recent sessions is the fear that Mr. Trump's tariff policy could push the US economy into recession. However, it could also cause higher inflation, thereby slowing the Fed's rate cut process.

Traders have now cut the odds of a rate cut in May to around 6%, according to CME's FedWatch, while a Reuters poll showed economists see a higher chance of a U.S. recession in the next 12 months.

The cautious sentiment is still present and it is clearly shown through the market developments when the S&P 500 narrowed its gains in the final minutes of the trading session, and the Nasdaq even turned down.

At the close of trading on Thursday, the S&P 500 rose 0.13% to 5,282.70. Of the 11 sectors of the S&P 500, eight rose, led by a 2.3% gain in energy, followed by a 2.2% gain in consumer staples.

While Nasdaq fell 0.13% to 16,286.45 points; Dow Jones Industrial Average fell 1.33% to 39,142.23 points.

Overall, in the shortened trading week, the S&P 500 fell 1.5%, the Nasdaq lost 2.6% and the Dow Jones fell 2.7%.

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