Investors reassured by Trump’s tax comments but cautious on tariffs
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Investors found some reassurance in U.S. President Donald Trump’s renewed commitment to tax cuts during his address to Congress but expressed concerns over his pledge to impose reciprocal tariffs and his proposal to eliminate semiconductor subsidies.
Market Reaction & Policy Impact
Markets remain volatile as Trump urged Congress to extend the 2017 tax cuts, a move welcomed by investors as a potential boost to corporate spending and disposable income. However, the president’s reaffirmation of 25% tariffs on imports from Mexico and Canada and the doubling of duties on Chinese goods to 20% added uncertainty, with market participants bracing for continued trade tensions.
The S&P 500 (SPX) erased its year-to-date gains and entered negative territory, while the Nasdaq Composite (IXIC) briefly dipped more than 10% from its December peak, signaling a correction before partially recovering. Volatility persisted as U.S. stock futures and the dollar saw marginal rebounds during Trump’s speech.
Tariffs & Economic Outlook
Market strategists remain concerned that prolonged trade disputes will pressure economic growth and inflation. Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted that continued tariff volatility suggests no imminent shift in U.S. trade policy. Meanwhile, Michael Schulman, CIO at Running Point Capital Advisors, highlighted that tax cuts could drive business spending but warned that their effectiveness depends on consumer demand resilience.
Semiconductor Industry Risks
In a notable shift, Trump called for the repeal of the 2022 CHIPS Act, which provides $52.7 billion in subsidies for semiconductor manufacturing, arguing that the funds should be used for debt reduction instead.
The potential rollback raises concerns for domestic chipmakers, supply chain security, and U.S. competitiveness in semiconductor production. Charu Chanana, chief investment strategist at Saxo, warned that companies relying on government support might reconsider expansion plans, potentially ceding market advantage to foreign rivals.
Investor Sentiment & Outlook
While tax cut extensions offer some market stability, heightened uncertainty around tariffs and industrial policy continues to weigh on investor sentiment. Market participants will closely monitor further policy developments and their implications for economic growth, inflation, and sector-specific impacts, particularly in technology and manufacturing.
Market Reaction & Policy Impact
Markets remain volatile as Trump urged Congress to extend the 2017 tax cuts, a move welcomed by investors as a potential boost to corporate spending and disposable income. However, the president’s reaffirmation of 25% tariffs on imports from Mexico and Canada and the doubling of duties on Chinese goods to 20% added uncertainty, with market participants bracing for continued trade tensions.
The S&P 500 (SPX) erased its year-to-date gains and entered negative territory, while the Nasdaq Composite (IXIC) briefly dipped more than 10% from its December peak, signaling a correction before partially recovering. Volatility persisted as U.S. stock futures and the dollar saw marginal rebounds during Trump’s speech.
Tariffs & Economic Outlook
Market strategists remain concerned that prolonged trade disputes will pressure economic growth and inflation. Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted that continued tariff volatility suggests no imminent shift in U.S. trade policy. Meanwhile, Michael Schulman, CIO at Running Point Capital Advisors, highlighted that tax cuts could drive business spending but warned that their effectiveness depends on consumer demand resilience.
Semiconductor Industry Risks
In a notable shift, Trump called for the repeal of the 2022 CHIPS Act, which provides $52.7 billion in subsidies for semiconductor manufacturing, arguing that the funds should be used for debt reduction instead.
The potential rollback raises concerns for domestic chipmakers, supply chain security, and U.S. competitiveness in semiconductor production. Charu Chanana, chief investment strategist at Saxo, warned that companies relying on government support might reconsider expansion plans, potentially ceding market advantage to foreign rivals.
Investor Sentiment & Outlook
While tax cut extensions offer some market stability, heightened uncertainty around tariffs and industrial policy continues to weigh on investor sentiment. Market participants will closely monitor further policy developments and their implications for economic growth, inflation, and sector-specific impacts, particularly in technology and manufacturing.