The S&P 500 narrowly missed its previous record on Tuesday, ending the day with a small gain. The trading week, shortened by the holiday weekend, is taking place against the backdrop of the end of the corporate earnings season, the upcoming publication of the minutes of the US Federal Reserve meeting, and ongoing geopolitical instability.
Three key US stock indices changed direction several times during the day, maneuvering between growth and decline. However, in the final minutes of trading, they managed to consolidate in the "green" zone, ending the day with a slight increase.
On Wednesday, market participants are awaiting the publication of the minutes of the January meeting of the Federal Reserve. During this meeting, the regulator decided to keep the base interest rate at the current level, given the ongoing inflationary pressure and uncertainty associated with the potential economic impact of tariffs initiated by the Donald Trump administration.
Senior Fed officials are unanimous on the current monetary policy stance. Philadelphia Fed President Patrick Harker, as well as Governors Michelle Bowman and Christopher Waller, said strong economic activity and accelerating inflation justify keeping the rate at its current level.
San Francisco Fed President Mary Daly also stressed that the regulator needs to wait for more convincing signals that inflation is slowing to the 2% target before considering a rate cut.
The published minutes of the Fed meeting will be closely studied by analysts and market participants. The focus will be on possible hints about the central bank's further course, especially in light of fresh macroeconomic data indicating rising consumer prices, worsening consumer sentiment, and weak retail sales.
"The Federal Reserve has been fairly open," says Chuck Carlson, CEO of Horizon Investment Services in Indiana. According to him, the regulator is closely monitoring the slowdown in economic growth, but does not yet see serious grounds for prompt easing of monetary policy.
"The economy is indeed showing signs of cooling, and the Fed is taking this into account. However, the pressure to lower rates is still small, so the regulator will most likely maintain a cautious approach in the near future," the expert explains.
Despite the uncertainty surrounding the future policy of the Fed, leading US stock indexes were able to end the trading session with a slight increase.
The fourth quarter is coming to an end, and most of the largest companies have already disclosed their financial results. At the moment, 383 companies from the S&P 500 index have reported profits, and 74% of them exceeded analysts' forecasts, according to LSEG.
Optimistic indicators contributed to the revision of expectations for corporate profit growth. If at the beginning of the year experts predicted an increase in profits of S&P 500 companies by 9.6% year-on-year, now this figure has risen to 15.3%.
While the stock market has shown resilience so far, further dynamics will depend on the Fed's monetary policy and macroeconomic data. Investors are closely watching key indicators such as inflation and consumer activity, which could determine the regulator's course in the coming months.
With corporate profits continuing to rise and indices stable, it can be assumed that the positive market sentiment will continue. However, the question of whether to cut interest rates remains open, and traders are waiting for more comments from the Fed, which will help to understand when exactly the regulator is ready to change its course.
Intel (INTC.O) shares have shown a strong rise of 16.1%, after information appeared about a possible split of the company. Tech giants Taiwan Semiconductor Manufacturing Co. (2330.TW) and Broadcom (AVGO.O) are reportedly considering deals that could lead to a restructuring of Intel and its division into two independent parts.
The news sparked a positive reaction in the semiconductor sector, pushing the Philadelphia Semiconductor Index (.SOX) up 1.7%.
Another big winner of the day was Constellation Brands (STZ.N), which rose 4%. Investors responded enthusiastically to the news that Berkshire Hathaway, the management company of legendary investor Warren Buffett (BRKa.N), acquired a significant stake in the alcoholic beverage maker.
The move in Constellation Brands confirms that Buffett's investment decisions remain a key indicator of confidence in the companies he backs.
Trading activity on U.S. exchanges remains strong, with 16.36 billion trades completed on the day, exceeding the average volume of 15.57 billion shares over the past 20 sessions. This shows that investors are still interested in the market despite the uncertainty in economic policy.
World stock indices are showing stability: European and American markets have renewed their historical highs. Investors are not rushing to panic due to new statements by US President Donald Trump, who has threatened to impose tariffs on imports of cars, semiconductors and pharmaceuticals.
It has been only four weeks since Trump's inauguration, but he has already imposed a 10% tariff on all imports from China, in addition to existing restrictions. In addition, 25% tariffs on goods from Mexico and non-energy imports from Canada were announced but then postponed.
Despite these trade barriers, stock markets remain resilient for now, and investors continue to adapt to the new economic realities.
President Donald Trump is ratcheting up the pressure on trading partners, announcing the imminent introduction of significant tariffs on pharmaceuticals and semiconductors. According to him, the new duties will start at 25% and could increase over the course of the year.
Trump also confirmed that similar measures will be taken on automobile imports as early as April 2. However, the market reaction to these threats has been muted, with investors increasingly viewing the president's tough statements as part of a negotiating tactic, rather than an inevitable scenario.
Despite the relative calm on stock markets, the American currency continues to strengthen. Increased global geopolitical risks lead to increased demand for safe haven assets, including the US dollar, which is reflected in its strengthening in the currency market.
Expert Ben Bennett, Asia Pacific strategist at Legal & General Investment Management, believes that market participants are generally optimistic:
"Investors assume that the parties will eventually reach an agreement, and that the planned tariffs will either be delayed or relaxed."
However, he also points out that the market may be underestimating the possible economic impact:
"The uncertainty caused by such news could slow investment decisions and affect the labor market. This is not yet felt by investors, but this situation may change."
European stock markets closed at record highs on Tuesday, posting gains of more than 10% since the start of 2025. This result significantly outpaced the US S&P 500 and Nasdaq indices, underscoring investor confidence in the European market.
However, UK stock futures remained virtually unchanged. Investors are awaiting inflation data, which could explain why the Bank of England has been reluctant to cut interest rates despite the weakening economic activity in the country.
In Asia, the main focus of investors has shifted to Chinese tech stocks (.HSTECH), which have been showing significant growth. Optimism in the market is fueled by several factors at once:
These events contributed to a sharp increase in the quotations of Chinese companies, which gave new impetus to the market in the region.
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