Wall Street edges higher, dollar bounces back amid tariff talks, economic data

By Stephen Culp

NEW YORK (Reuters) -Wall Street edged higher and the dollar rebounded on Tuesday as market participants looked past ongoing tariff wrangling and lowered economic expectations ahead of Friday’s crucial U.S. employment report.

All three major U.S. stock indexes were up modestly while gold backed down from a near four-week high in opposition to the strengthening greenback.

"Today is a day with no big drivers," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "The market is becoming more comfortable with Trump’s negotiation style. He comes out with guns blazing and then is, you know, very happy to, you know, put his guns away, having made his point.

"He expects a reasonable settlement at least, which he’ll call a huge win, of course," Ghriskey added. "But in reality he’s not looking to punish our trading partners; he’s looking for incremental adjustments to tariffs."

The Organization for Economic Cooperation and Development (OECD) said the global economy is on course for a more drastic slowdown than it expected only a few months ago. It cited the fallout from Trump’s trade war, and warned that growth will be even weaker as protectionism increases, fuelling inflation and disrupting supply chains. 

That sentiment was shared by the United Nations’ International Labor Organization (ILO), which downgraded its global employment forecast due to worsening economic conditions arising from trade tensions.

In economic data, a report from the U.S. Labor Department showed the number of unfilled U.S. jobs unexpectedly rose in April, while new orders for factory-made goods posted a steeper drop than analysts anticipated.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

Investors are now training their focus on the May employment report, expected on Friday. Economists polled by Reuters expect the U.S. economy added 130,000 jobs last month, with the unemployment rate standing pat at 4.2%.

The Dow Jones Industrial Average rose 30.12 points, or 0.07%, to 42,334.83, the S&P 500 rose 12.36 points, or 0.21%, to 5,948.30 and the Nasdaq Composite rose 100.78 points, or 0.52%, to 19,343.39. 

European stocks were moderately lower as investors exercised caution while awaiting further developments in tariff negotiations, but pared losses in the wake of a report that Euro Zone inflation has eased below the European Central Bank’s (ECB) target, paving the way for further policy easing.

MSCI’s gauge of stocks across the globe rose 0.37 points, or 0.04%, to 883.25. The pan-European STOXX 600 index fell 0.13%, while Europe’s broad FTSEurofirst 300 index fell 1.85 points, or 0.09%.

Emerging market stocks rose 3.26 points, or 0.28%, to 1,157.03. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 0.37% to 609.76, while Japan’s Nikkei fell 23.86 points, or 0.06%, to 37,446.81.

The dollar bounced back from a six-week low, even as concerns persisted over potential economic damage in the wake of Trump’s trade war. 

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.58% to 99.15, with the euro down 0.49% at $1.1386.

Against the Japanese yen, the dollar strengthened 0.74% to 143.75.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

Yields on 10-year U.S. Treasuries dipped but were off their lows in the wake of weaker than expected U.S. economic data.

The yield on benchmark U.S. 10-year notes fell 2.2 basis points to 4.44%, from 4.462% late on Monday.

The 30-year bond yield  fell 3.3 basis points to 4.9614% from 4.995% late on Monday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.8 basis points to 3.953%, from 3.945% late on Monday.

Crude prices extended their gains, supported by roiling geopolitical concerns as the war in Ukraine intensified and Iran appeared poised to reject a U.S. nuclear deal proposal. 

U.S. crude rose 1.87% to $63.69 a barrel and Brent rose to $65.68 per barrel, up 1.62% on the day.

Gold prices retreated from a near four-week high amid profit-taking and in opposition to the strengthening dollar. 

Spot gold fell 0.97% to $3,346.06 an ounce. U.S. gold futures fell 0.75% to $3,345.20 an ounce.

Which stock should you buy in your very next trade?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record. With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.

Unlock ProPicks AI