US stocks hold near all-time highs after a better-than-expected update on inflation
THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.
Early trading on Wall Street was quietly mixed on Wednesday as markets shift their attention toward a deluge of corporate earnings reports while monitoring ever-changing developments on U.S. trade policy.
Futures for the S&P 500 were flat before the bell, while futures for the Dow industrials rose 0.2% Nasdaq futures were down 0.2%.
Johnson & Johnson rose 1.8% after the drug and medical device giant beat analysts' sales and profit targets and raised its full-year outlook on both. J&J said it expects 'game-changing approvals and submissions' in the second half of 2025 on an array of products in its pipeline.
Bank of America ticked up less than 1% after it beat Wall Street's second-quarter profit targets. The bank's net interest income grew for the fourth straight quarter, but came in slightly lower than expectations.
Goldman Sachs also beat Wall Street's sales and profit targets on a strong performance from its trading division, which took advantage of market volatility triggered by President Donald Trump's on-again-off-again tariff announcements this spring. Its shares rose about 1% before markets opened.
Netherlands-based ASML, the world's leading supplier of chipmaking gear, said in its latest earnings report Wednesday that the impact of Trump's tariffs on its business was less negative than anticipated, but its shares tumbled more than 7% after the company said it couldn't guarantee growth next year.
The company makes equipment used in cutting edge semiconductors and one of its key customers is Taiwan Semiconductor Manufacturing Co., or TSMC, a major supplier for Nvidia.
"The level of uncertainty is increasing, mostly due to macroeconomic and geopolitical consideration. And that includes, of course, tariffs,' CEO Christophe Fouquet said.
United Airlines posts its most recent quarterly results after the bell Wednesday.
Also coming Wednesday is the government's report on producer prices, which measures inflation at the wholesale level.
A report on Tuesday showed that consumer inflation in the United States accelerated to 2.7% last month from 2.4% in May. Economists said higher prices for clothes, toys and other imported goods suggest that Trump's stiffer tariffs are fueling inflation. That sticky inflation could mean that the Federal Reserve will hold its ground on interest rates, which have remained elevated in recent years after red-hot demand and supply chain breakdowns in the wake of the pandemic sent prices for just about everything skyrocketing.
Wall Street loves lower interest rates because they juice prices higher for stocks and other investments, and Trump himself has been clamoring for the Federal Reserve to cut rates more quickly. But the Fed has been keeping interest rates on hold this year since lower rates can give inflation more fuel while they boost the economy. Fed Chair Jerome Powell has insisted he wants to see more data about how tariffs affect the economy and inflation.
Elsewhere, in Europe at midday Germany's DAX rose 0.4%, while Britain's FTSE 100 gained 0.3%. The CAC 40 in Paris was unchanged.
In Asian trading, Tokyo's Nikkei 225 edged less than 0.1% lower, to 39,663.40. Investors are focusing on the potential impact of an election for the Upper House of Parliament on Sunday that is expected to lead to tax cuts and higher spending as lawmakers try to restore the waning popularity of the ruling Liberal Democrats.
Worries over a deterioration in Japan's fiscal health have pushed yields of long-term Japanese government bonds to their highest levels in years.
'What's at stake isn't simply which party hands out the biggest bundle of goodies. It's whether the walls holding up Japan's house of debt can withstand another round of fiscal fireworks…' Stephen Innes of SPI Asset Management said in a commentary.
Elsewhere in Asia, Hong Kong's Hang Seng shed 0.3% to 24,517.76, while the Shanghai Composite index slipped less than 0.1% to 3,503.78.
South Korea's Kospi lost 0.9% to 3,186.38 and in Australia, the S&P/ASX 200 declined 0.8% to 8,561.80.
Taiwan's Taiex jumped 0.9% and India's Sensex added 0.2%. Thailand's SET dropped 0.3%.
In Jakarta, shares rose 0.7% after President Donald Trump said on Truth Social that he plans to charge imports from Indonesia a tariff of 19%, while American goods sent to the Southeast Asian country will face no tariffs. Trump also said Indonesia committed to buying U.S. energy, agricultural products and aircraft.
Indonesia's central bank cut its key interest rate by 0.25 percentage points on Wednesday, to 5.25%.
'We have calculated everything and discussed everything. The most important thing for me is my people, as I must protect the interests of our workers," Indonesian President Prabowo Subianto told reporters, adding that "this is our offer, and we are not able to give more (to the U.S.).'
In energy trading, U.S. benchmark crude oil shed 79 cents to $65.73 per barrel. Brent crude, the international standard, slipped 67 cents at $68.04 per barrel.
The dollar fell to 148.75 Japanese yen from 148.87 yen. The euro was steady at $1.1601.
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CBC
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The U.S. economy is thriving in spite of tariffs. Will it last?
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GM stock fell on the news, but has since rebounded, paring losses and climbing almost all the way back to where it was before it published its earnings. Financial markets have had some pretty volatile sessions, including steep sell-offs when tariffs are announced, and big rallies when exemptions are made. But stock markets in both Canada and the U.S. are at or near record highs — which investors believe is a sign that the resilience we're seeing will last. A stockpile of products The question, though, is whether the impact of the tariffs has simply been delayed. When the levies were first announced last spring, businesses around the world scrambled to get product out the door and into the United States. That has led to a huge stockpile of products — and it means American importers have not yet had to bear the worst of the tariffs. WATCH | The future of Canada-U.S. free trade: Is Canada-US free trade dead? | About That 4 days ago North American free trade is teetering on the edge of uncertainty as U.S. President Donald Trump's tariffs continue to complicate how goods come and go. Andrew Chang explores signs that free trade — as we've come to know it — is on its way out, and challenges that may lie ahead in renegotiating the Canada-U.S.-Mexico Agreement (CUSMA). Images provided by Getty Images, The Canadian Press and Reuters. "There was a lot of front-running and that may be one of the big reasons why we haven't seen much impact yet," said BMO's Porter. "There's probably some pain to come, but I don't think it's going to be as bad as many economists were fretting about earlier this year, at least for the U.S." Canada's economy has shown resilience, too But both economists point to the fact that Canada's economy has also fared better than almost anyone had expected. Economic growth shrank in April, but only by 0.1 per cent. Statistics Canada says another 0.1 per cent decline is likely for May. (Those numbers will be confirmed on Thursday.) The unemployment rate has actually begun to decline since peaking in May at seven per cent. And last week's retail sales figures showed consumer spending had started to pick up again in June. "We've been pointing to this broader resilience in consumer spending," said Claire Fan, a senior economist with RBC. She says consumer sentiment plunged in the spring, at the height of the uncertainty. But since then, RBC crunched U.S. customs data and found exemptions for CUSMA-compliant products have dragged the average effective tariff rate all the way down to as low as 2.3 per cent. "It's a reflection of President Trump's overall strategy of coming out very aggressive early on, but then walking things back. I mean, the tariffs have not been as punitive for Canada as initially believed — nowhere close to it," said Mendes of Desjardins. Sector-specific pain However, real damage has been done in sectors like auto, steel, aluminum and lumber. The concern now is that the carve-outs Canada has secured for CUSMA-compliant products won't last. "Unless a trade deal is reached to significantly reduce U.S.-Canada tariffs by Aug. 1, when new U.S. tariffs are set to come into effect, we expect job losses and higher prices from tariffs to squeeze disposable income and cause households to tighten their purse strings," wrote Michael Davenport, senior economist at Oxford Economics in a note to clients. WATCH | Negotiations continue between Canada and the U.S.: Canada-U.S. Trade Minister Dominic LeBlanc, speaking to reporters in Washington, D.C., said Canada will only accept a deal when there is one in the best interest of workers and the Canadian economy on the table. On the one hand, some in the Trump administration will look at the U.S. economy's relative resilience as a reason to double down and push harder for more and more punitive tariffs. But escalation wouldn't just be bad for the Canadian economy. Right now, most businesses and consumers on both sides of the border have been sheltered from the worst impacts of the tariffs. That shelter depends on a fine and tricky balance of importers eating some costs, exporters dropping some prices and countries limiting retaliatory measures. Upending that balance further comes with risks on both sides of the dispute.
