Stock market teeters amid trade war, recession fears
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(NEW YORK) — U.S. stocks teetered in early trading on Wednesday, posting shaky performance amid an escalating global trade war and concerns about a possible recession.
After some initial modest gains, the Dow Jones Industrial Average fell 330 points, or 0.8%, while the S&P 500 dropped 0.25%. The tech-heavy Nasdaq ticked up 0.25%.
Trading opened minutes after a fresh inflation report showed price increases had eased more than expected in February, the first full month under President Donald Trump.
Tit-for-tat tariffs continued to rattle global trade early Wednesday, however.
Trump’s 25% tariffs on all imported steel and aluminum products went into effect overnight. In response, Canada and the European Union slapped retaliatory duties on U.S. goods.
Tesla, the electric carmaker run by Elon Musk, soared about 6% in early trading on Wednesday. The gains came a day after Trump touted the company alongside Musk in an event at the White House.
Some economists say that while the U.S. tariffs could boost the local steel industry in the United States, they could also lead to higher prices for industries that purchase steel. Those higher prices may eventually reach consumers.
The U.S. relies heavily on imported aluminum and those costs are expected go up as well.
This is a developing story. Please check back for updates.
(NEW YORK) — Americans’ household debt — including credit cards, mortgages, auto loans and student loans — is at a new all-time high $18.04 trillion, according to a report released Thursday by the Federal Reserve Bank of New York.
Overall debt grew by $93 billion in the last three months of 2024 — and about half of that increase was new credit card debt.
Americans’ total credit card balances now stand at a record-high $1.21 trillion.
On a call with reporters Thursday, New York Federal Reserve researchers said credit card debt typically goes up at the end of the year when consumers do their holiday shopping. Researchers said they expect balances will decline at the start of this year as shoppers start to pay down that debt.
High interest rates are another factor behind elevated credit card debt levels, the researchers said. They added that income levels have been going up as debt is increasing, a positive sign for the health of the economy.
Delinquencies — reflecting missed payments on credit card bills — also ticked up in the fourth quarter.
The report highlighted higher delinquency rates for auto loans, too. Americans hold nearly $1.7 trillion in auto loan debt.
New York Federal Reserve researchers said higher new and used car prices in the wake of the pandemic are a key reason why some Americans are behind on their auto payments.
“While mortgage delinquency rates are similar to pre-pandemic levels, auto loan delinquency transition rates remain elevated,” said Wilbert van der Klaauw, economic research adviser at the New York Federal Reserve. “High auto loan delinquency rates are broad-based across credit scores and income levels.”
(NEW YORK) — The stock market climbed to record highs in 2024, extending banner gains achieved the previous year.
The S&P 500 — the index that most people’s 401(k)’s track — climbed nearly 28% this year, as of Monday.
The tech-heavy Nasdaq leapt a staggering 34% over that period; while the Dow Jones Industrial Average climbed 16%.
Consecutive years of strong stock market performance have posed a quandary for forecasters: Will high stock prices scare off would-be investors in 2025, or will momentum push shares even higher?
Experts have attributed the rise of share prices this year to a set of favorable trends: Solid economic growth, enthusiasm about artificial intelligence and the long-awaited start of interest rate cuts at the Federal Reserve.
Those tail winds are expected to keep pushing stocks skyward in 2025, experts said, but they cautioned about more-than-usual uncertainty that could prevent further gains or even amplify them. The biggest unknown for stocks in 2025, they said: President-elect Donald Trump.
“As we close the books on 2024 and peer into 2025, perhaps the uncertainties this time are of a magnitude beyond the norm,” Kevin Gordon and Liz Ann Sonders, a pair of investment strategists at Charles Schwab, said last week. “Good luck figuring this one out.”
Good news abounded for the stock market this year, in part because the economy defied doomsayers.
The economy continued to grow at a solid clip in 2024, while inflation fell. That performance kept the U.S. on track for a “soft landing,” in which the economy averts a recession while inflation returns to normal.
Gross domestic product grew at a robust 2.8% annualized rate over three months ending in September, the most recent period for which data is available.
“U.S. strength remains undiminished,” Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement.
Inflation has slowed dramatically from a peak of more than 9% in June 2022. A months-long stretch of progress earlier this year helped nudge the Federal Reserve toward its first interest rate cuts in four years.
In recent months, the Fed has cut its benchmark rate three-quarters of a percentage point, dialing back its fight against inflation and delivering some relief for borrowers saddled with high costs.
Over time, rate cuts ease the burden on borrowers for everything from home mortgages to credit cards to cars, making it cheaper to get a loan or refinance one. The cuts also boost company valuations, potentially helping fuel returns for stockholders.
The Fed is expected to continue cutting interest rates next year, though a recent bout of stubborn inflation could slow, or even pause, the lowering of rates, experts previously told ABC News.
“Markets expect gradual rate cuts next year, which would imply inflation stays under control, the job market hums along at an acceptable pace, stocks rise, and everybody is happy,” Callie Cox, chief market strategist at Ritholtz Wealth Management, said in a statement to ABC News.
“Reality isn’t that cut and dry, though,” Cox added.
Some analysts pointed to Trump’s policies as a major source of uncertainty for the nation’s economic performance and, in turn, the stock market.
Trump has vowed to cut taxes for individuals and corporations, which could spur economic growth and raise stock prices, some experts said. However, they added, Trump’s proposed tariffs could hurt some U.S. producers and retailers that depend on imported raw materials, and may cause a resurgence of inflation. As a result, some stocks could suffer.
“The most significant wild card on the table for 2025 will be the potential implementation of tariffs,” David Sekera, chief U.S. market strategist for Morningstar, said earlier this month.
Since 1990, there have been 12 years in which the S&P 500 has gained 20% or more, Cox said. The stock market crossed that threshold last year, and is almost certain to do so when 2024 comes to an end. It will be difficult for the stock market to achieve that feat for a third consecutive year, Cox added.
“If you’re expecting a repeat of 2024, you’re asking a lot of the market gods,” Cox said.
Still, the enticing possibility of another rally will draw investor interest as observers watch for any early signs of sputtering.
“The opportunities for investors are plenty, but so are the obstacles,” Shah said.
(WASHINGTON) — Autoworkers, farmers and alcohol distillers are among a set of U.S. workers who risk losing their jobs as a result of potential tariffs on Canada, China and Mexico, experts told ABC News.
The U.S. president was expected to sign executive orders on Tuesday putting in place the 25% tariffs on goods from Mexico and Canada and 10% tariffs on those from China, according to the White House.
Trump announced on Monday that the proposed tariffs on most goods from Canada and all products from Mexico would be paused for one month, putting the policies on schedule to take effect in early March. The postponements came following conversations Trump had with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. Trump said Monday afternoon he plans to talk to China in the next day or two about tariffs on that country.
Some U.S. shoppers and economists have raised alarm about the potential for tariff-driven price increases, since importers typically pass along a share of the cost of the higher taxes to consumers.
A lesser-known effect of the potential tariffs, however, could arise as some retailers struggle to sell imported goods at competitive prices while manufacturers reckon with higher costs of raw materials such as car parts and lumber, experts said. Sales could wobble, they added, leading directly to job cuts.
Potential retaliatory tariffs slapped on U.S. exports could prove another cause of layoffs, the experts said, since U.S. firms dependent on selling products overseas risk weakened performance.
“It’s like Trump took a grenade and threw it into the economy, and he walked away to see what happens,” Rob Handfield, professor of operations and supply chain management at North Carolina State University, told ABC News.
The Trump administration did not immediately respond to ABC News’ request for comment.
In a series of social media posts over the weekend, Trump said the tariffs target Canada, Mexico and China for hosting the manufacture and transport of illicit drugs that end up in the United States. In a Truth Social post on Sunday, Trump urged the three countries to address his concerns, while acknowledging the tariffs may cause some financial hardship within the U.S.
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID,” Trump wrote.
In recent days, some trade associations and labor unions voiced warnings about tariff-related job losses.
Jay Timmons, president and CEO of the National Association of Manufacturers, said small- and medium-sized firms in the sector employing millions of Americans risk “significant disruptions” as a result of potentially high energy prices and costly supply chain workarounds.
“Manufacturers will bear the brunt of these tariffs,” Timmons said, adding that the policies would put “American jobs at risk.”
Distilled Spirits Council, a trade association representing alcohol makers across North America, cautioned that tariffs would harm business in all three countries. “Maintaining fair and reciprocal duty-free access for all distilled spirits is crucial for supporting jobs and shared growth,” the group said.
The risks for U.S. workers are perhaps best demonstrated by the auto industry, which employs about 4 million people, experts said.
U.S. automakers hold deep ties to Canada and Mexico, since products often snake back and forth between the countries before a car reaches full assembly, Christopher Conlon, a professor of economics at New York University who studies trade, told ABC News.
Mexico and Canada make up the top two U.S. trading partners for both finished motor vehicles and car parts, according to a Cato Institute analysis of data from the U.S. International Trade Commission.
“The supply chains involve shipping parts back and forth over the border five times, six times, seven times. If every time a part crosses the Canadian border it gets taxed at 25%, that will add up really quickly,” Conlon said, noting the added costs could hike car prices by as much as $10,000 and, in turn, weaken sales.
“The companies will have to scale back production, and that will mean fewer shifts,” Conlon added.
The production slowdown may lead to job cuts at companies indirectly impacted by the tariffs, such as car dealerships and auto-part sellers, experts said. More than 550,000 workers at car dealerships representing international brands risk losing their jobs if the industry falters due to the tariffs, the American International Automobile Dealers Association told ABC News in a statement.
To be sure, employment may grow in some domestic industries protected by the tariffs, such as the steel and energy sectors, some experts said. Even those businesses, however, may contend with challenges if the tariffs limit consumer demand, they added.
Potential job gains in some sectors would not outweigh the losses in others, Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.
“It’s very difficult to see a net positive of this in terms of employment for the U.S.,” Miller said.
