U.S. stock markets delivered mixed results on Wednesday as investors weighed ongoing trade negotiations and anticipated Friday’s employment report. The Nasdaq edged higher thanks to tech sector gains, while the S&P 500 remained mostly flat and the Dow slipped slightly. Treasury yields dropped, providing some relief to equity markets, as analysts observed a potential cap on how high rates might go in the current environment.
Trade Tensions Intensify as Economic Data Reveals Slowing Growth and Rising Inflation Pressures
Global trade tensions remained a critical concern. U.S.-European talks showed some progress despite fresh U.S. metal tariffs, while China’s restrictions on key mineral exports threatened global supply chains, particularly in the auto industry. President Trump’s comments labeling Chinese President Xi Jinping as tough and difficult to negotiate with dampened hopes for a quick trade resolution. Analysts suggested that although markets expect the administration to avoid serious damage, investor confidence remains fragile.
Markets Mixed as Trade Tensions Mount, Job Growth Slows, and Inflation Concerns ResurfaceEconomic indicators released Wednesday pointed to slowing momentum. ADP reported a sharp drop in private sector job additions, falling far short of expectations ahead of the more influential Labor Department report due Friday. Additionally, the U.S. services sector contracted last month, with inflation pressures rising as prices paid reached their highest levels since late 2022. These data points reinforced concerns about a softening labor market and persistent inflation.
Global Markets Rally While Dollar Weakens and Yields Drop Amid Economic and Trade Worries
Despite mixed signals in the U.S., global markets showed strength. European equities rose, with Germany’s DAX hitting a record high following tax relief measure, even as euro zone activity weakened. Emerging markets and Asian stocks also saw gains. Meanwhile, the dollar weakened across the board, reflecting weaker economic data. The euro and yen strengthened against the greenback, while gold prices rose due to the dollar’s dip and investor caution ahead of key economic events.
U.S. Treasury yields fell sharply across maturities, driven by disappointing economic data and investor caution around trade developments. The 10-year and 30-year yields dropped by over 10 basis points, while the 2-year yield also declined. Crude oil prices turned lower as U.S. inventory data surprised to the upside, adding to supply concerns in light of trade disputes and increased OPEC+ production. In contrast, gold gained modestly as a safe-haven asset, buoyed by the weakening dollar and market uncertainty.
