The US stock market closed lower on Monday after the White House increased pressure on trading partners to agree to a deal before new tariffs take effect.
- The S&P 500 fell 0.8%, its biggest decline since mid-June, but remained near last week’s record high.
- The Dow Jones and Nasdaq fell 0.9%, with declines widespread across sectors, particularly technology, financials and consumer.
- Tesla plunged 6.8%, the worst in the S&P 500, due to the political conflict between Elon Musk and his former ally, Donald Trump.
The trigger: Official letters from the Trump administration to Japan and South Korea confirming the implementation of 25% tariffs starting August 1, as well as the imposition of new tariffs for Malaysia, Kazakhstan, South Africa, Laos, and Myanmar.
Trump also threatened an additional 10% tariff on the BRICS (Brazil, Russia, India, China, South Africa) countries, which had opposed these tariffs at the summit.
Global Impact and Uncertainty
- These tensions triggered renewed concerns over global economic growth and recession risks.
- Markets reacted negatively after the previous week was buoyed by a strong US jobs report.
- According to Nomura and Glenmede analysts:
- The future of the market depends on the scope of the tariffs, their magnitude, and their effective date.
- The US-Vietnam deal could be a new negotiation model, where US exports are duty-free, and Vietnamese exports are subject to a 20% tariff.
Additional News and Data
- Healthcare stocks such as Molina Healthcare and UnitedHealth fell on soaring costs.
- CoreWeave acquires Core Scientific in a $9 billion stock transaction.
- The 10-year bond yield rose to 4.39%.
- Oil prices rose, after OPEC+ agreed to increase production by 548,000 barrels/day from August.
This week lacks economic data, but the Fed meeting minutes will be released on Wednesday. Jerome Powell is still cautiously awaiting the impact of tariffs on inflation and the economy before taking the next interest rate move.