Berkshire Hathaway slips after Warren Buffett steps down as CEO. The US services sector shows growth in April. Skechers surges following a $9 billion privatization deal. Investors await trade agreements between the US and its partners. Asian currencies take center stage after a sharp jump in the Taiwanese dollar. Major indices decline: Dow down 0.24%, S&P 500 down 0.64%, Nasdaq down 0.74%.
Markets pause after record-breaking rally
On Monday, the S&P 500 posted a decline, ending its most impressive upward streak in the past two decades. Investors adopted a wait-and-see approach ahead of a key Federal Reserve meeting scheduled later this week. Optimism was tempered by unexpected remarks from President Donald Trump about upcoming tariffs.
Nine steps up and one step back
The first warning signs appeared back on April 2, when the Trump administration unveiled its initial package of tariff measures. At that time, the S&P 500 lost nearly 15% in a short period. However, markets quickly rebounded, with the index posting nine consecutive days of gains, its strongest streak since 2004. Monday's decline marked the first break in that rally.
Correction wave hits all three major indices
On Monday, all major Wall Street indices closed lower, reflecting investor anxiety over tariff-related comments from the White House and corporate news. The Dow's nine-day rally came to an end, and the tech sector came under renewed pressure.
Trading Day Summary:
- The Dow Jones Industrial Average dropped 98.60 points (–0.24%) to close at 41,218.83, ending its longest winning streak since December 2023.
- The S&P 500 fell by 36.29 points (–0.64%), finishing at 5,650.38.
- The Nasdaq Composite declined 133.49 points (–0.74%) to 17,844.24.
Hollywood on edge
President Trump's comments on potential 100% tariffs on foreign films spooked media stocks, with companies involved in production and distribution sliding into the red. However, by the close of trading, some of the losses had been partially recovered:
- Netflix dropped 1.9%, ending an 11-day winning streak.
- Amazon.com also fell 1.9%, continuing pressure on the Big Tech sector.
- Paramount Global declined 1.6%, reacting to fears of media content import restrictions.
Buffett steps aside
Berkshire Hathaway Class B shares fell 5.1% after legendary investor Warren Buffett announced his decision to step down as CEO. The departure of the "Oracle of Omaha" marked a symbolic moment and raised investor concerns about the company's future direction.
All eyes on Fed
Investors are now focused on Wednesday, when the Federal Reserve is set to release its latest policy statement. Analysts expect the benchmark interest rate to remain unchanged but Fed Chair Jerome Powell's comments will be closely scrutinized for any hints of a potential shift in monetary policy.
According to data from LSEG, markets are now pricing in a possible 75 basis point rate cut by 2025, with the first move potentially coming as early as July.
Tariffs and earnings: delicate balance under threat
Alongside anticipation of the Fed's upcoming remarks, investors are increasingly uneasy about the potential fallout from US tariff policy. The impact was immediate in corporate earnings reports: shares of Tyson Foods plunged by 7.7% after the meat producer missed revenue expectations.
Analysts warn that new trade barriers could disrupt global supply chains and squeeze profit margins, particularly for companies heavily reliant on exports.
Deal of day: Skechers surprises Wall Street
Unlike the struggling food sector, retail delivered a bright spot. Skechers became the day's standout performer, with its stock soaring 24.3% following news of a $9.4 billion buyout by private equity firm 3G Capital. The transaction is already being hailed as one of the largest M&A deals in the consumer sector this year.
Volatility without drama
Global equity markets moved in a narrow range on Tuesday, reflecting investor caution amid ongoing trade concerns and uncertainty about the broader economic outlook. In currency markets, the US dollar began clawing back recent losses, particularly against Asian currencies, as traders assessed potential risks from Washington's trade stance.
Hong Kong sounds alarm
Market activity intensified in Hong Kong on Tuesday, where the currency regulator was forced to intervene to defend the local exchange rate band. The central bank spent $7.8 billion to prevent the Hong Kong dollar from strengthening too far, marking the largest intervention in recent months.
Yuan and Taiwan Dollar lead gains
On the mainland, the Chinese yuan climbed to 7.23 per dollar, reaching its highest level since March 20. Even more remarkable was the Taiwan dollar's rally, which on Tuesday morning held near 30 per dollar, just shy of Monday's three-year high of 29.59. Over just two days, the Taiwan dollar surged by an impressive 8%.
Asian stock markets lose steam
Despite the currency action, regional equity markets showed a muted performance. The MSCI Asia-Pacific Index (excluding Japan) slipped by 0.2%, as Japanese markets remained closed for a national holiday, contributing to subdued overall momentum across Asia.
- Taiwan's TWII index slipped 0.3%, reacting to the local currency's strength, which could undermine export competitiveness.
- In China, where trading resumed after the holidays, the CSI300 index opened slightly higher, reflecting cautious optimism.
- Meanwhile, Hong Kong's Hang Seng fell 0.2%, pressured by currency intervention and growing market uncertainty.
Faint hope for dialogue
Amid the ongoing turbulence, investors clung to a faint hope of de-escalation after reports emerged that China is considering trade talks with the U.S. Washington has submitted a formal proposal, and official sources say Beijing is currently reviewing the potential terms. This development has become a new focal point for market watchers and could shift sentiment in the coming weeks.
Oil stabilizes after sharp drop
Oil prices showed signs of stabilizing on Tuesday, following a steep drop the previous day that sent them to their lowest levels in four years. The sell-off was triggered by an OPEC+ initiative to rapidly increase production, sparking concerns among traders and analysts about oversupply in the face of fragile demand.
While no dramatic moves were observed, market nerves remain high. Investors are carefully watching the supply-demand balance and weighing the broader economic risks, including the trade war fallout and signs of slowing global industrial output.
Investors turn to gold for safety
Amid market uncertainty and rising geopolitical tensions, gold has once again become a safe haven for investors. On Tuesday, the precious metal climbed to a one-week high, reflecting growing demand for haven assets. This renewed interest in gold is driven not only by volatility in commodity markets but also by expectations surrounding the Federal Reserve's next moves and signs of a global economic slowdown.
Analysts note that if uncertainty persists, gold demand could continue to rise, especially in light of a weakening dollar and early signs of falling yields on government bonds.
