Trump's Tariffs May Drive Fed to Pause Rates Longer Amid Higher Inflation Worries

Barry Adams
20 Feb, 2025
New York City

Wall Street indexes came under pressure after policymakers showed no urgency in cutting rates in the near future. 

The S&P 500 index declined 0.6%, and the Nasdaq Composite dropped 0.9%, and the latest meeting of minutes showed members of the rate-setting committee agreed that inflation needs to weaken further before they can trim rates again. 

The Federal Open Market Committee's stance was widely perceived as the Fed delaying the rate cut to the second half, and investors dialed down expectations of additional rate cuts to one from three. 

Initial weekly jobless claims increased by 5,000 to 219,000 in the week ending on February 15, the Department of Labor reported Thursday. 

Continuing claims, which lag by one week, edged up 24,000 to 1.87 million, confirming that the labor market conditions remain strong.

 

U.S. Commodities, Currencies, Indexes, Yields

The S&P 500 index decreased 0.6% to 6,107.44, the Nasdaq Composite edged down 0.8% to 19,895.64, and the Russell 2000 index was down 0.3% to 2,276.24.

The yield on 2-year Treasury notes edged lower to 4.26%, 10-year Treasury notes decreased to 4.52%, and 30-year Treasury bonds declined to 4.74%.

WTI crude oil increased $0.46 to $72.59 a barrel, and natural gas prices edged lower by $0.27 to $4.12 a thermal unit.

Gold increased by $1.87 to $2,937.55 an ounce, and silver edged up by $0.38 to $33.09.

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased 0.19 to 106.98 and traded at a two-year high.

 

Stock Movers 

Walmart Inc. dropped 6% to $97.62 after the retailer's weak guidance for the current fiscal year overshadowed strong results in the latest quarter. 

The company guided fiscal 2026 revenue growth to slow to between 3% and 4%. 

Klaviyo Inc. declined 8.5% to $43.06 after the CRM software developer reported better-than-expected fourth quarter results, but the company's current quarter outlook fell short of expectations. 

IMAX Corp. declined 3% to $26.41 after the advanced movie theater technology company's earnings failed to meet market expectations. 

Alibaba Group Holding jumped 11% to $140.57 after the Chinese e-commerce giant reported a rise in revenue and earnings in the fourth quarter, driven by a 13% increase in revenue in the third quarter. 

Shake Shack soared 11.5% to $124.35 after the fast food company's fourth quarter results met preliminary results announced in mid-January. 

The company guided revenue in the current quarter to range between $326.5 million and $330.9 million, and the company's guidance came ahead of market expectations despite the ongoing challenges linked to wildfires in Los Angeles. 

Builders FirstSource, Inc. gained 1.6% to $147.06 after the company's earnings were ahead of analysts' expectations, but revenue fell short.