Tariff Threats Push Dow Lower Despite Initial Gains

The Dow Jones Industrial Average (DJIA) experienced a turbulent trading session on Thursday, marked by significant volatility. Initially, the DJIA surged by approximately 400 points, driven by a rebound in heavily weighted stocks. However, this upward momentum was ultimately curtailed by renewed tariff threats from U.S. President Donald Trump, leading to a final decline of 120 points.

President Trump’s revised schedule for imposing tariffs on Canada and Mexico, as well as Chinese goods, contributed to investor unease. Despite this, there was an initial positive market reaction, seemingly reflecting investors’ acclimatization to the Trump administration’s fluctuating trade policies.

Economic data released during the day presented a mixed picture. U.S. fourth-quarter Gross Domestic Product (GDP) growth exceeded expectations, with a 2.4% quarter-over-quarter increase. Simultaneously, January’s Durable Goods Orders demonstrated a robust 3.1% month-over-month rise. 1 However, it’s important to note that this surge was significantly influenced by substantial orders in the transportation sector, particularly from Boeing and automotive companies. When these factors are excluded, Durable Goods Orders remained flat.

Adding to market concerns, preliminary data indicated a potential uptick in inflation, with the Core Personal Consumption Expenditure Price Index (PCEPI) exceeding forecasts.  
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