S&P 500 flat as Trump says no further extensions on Aug. 1 tariffs

Investing.com-- The S&P 500 struggled for direction Tuesday as investors assessed the economic impact of U.S. President Donald Trump’s latest salvo in his aggressive tariff agenda.

At 11:57am ET (16:57 GMT), the Dow Jones Industrial Average fell 126 points, or 0.3%, while the S&P 500 index was flat, {{14958|NASDAQ added 0.2%.

Trump says no extensions on new tariff deadline  

Trump told reporters that his administration won’t grant extensions to reciprocal tariffs that were delayed to Aug. 1 from a prior deadline of July 9, keeping the economic threat of a trade war alive should negotiations prove unsuccessful before the new deadline. 

Trump on Monday released letters outlining trade tariffs against a slew of Asian and African countries. He imposed a 25% levy on South Korea, Japan, Malaysia, and Kazakhstan, a 30% levy on South Africa, a 32% levy on Indonesia, a 35% levy on Bangladesh, and a 36% levy on Thailand. 

Notably, the higher tariffs will not combine with previously announced sector tariffs such as those on automobiles, steel, and aluminum. Crucially, letters were not sent to India and the European Union, which analysts and media reports interpreted as an indication that possible trade deals may be imminent.

Trump’s flurry of tariff announcements represent "decidedly mixed news" for financial markets, according to analysts at Wolfe Research, in a note to clients.

The new tariff rates, when combined with a preliminary trade deal reached with Vietnam last week, would add $54 billion in annual government revenues, but the tariff deadline extension essentially pushes out a 90-day pause that was previously instituted after Trump announced his punishing "reciprocal" levies in April -- and does not remove the threat of elevated tariffs snapping back into place in the weeks ahead.

Yet investors remain largely reassured by the belief that Trump will be flexible in ongoing trade negotiations and is not keen to see markets roil as they did in the wake of his "Liberation Day" event, the strategists said.

"At a very basic level, nothing actually happened based on Trump sending these letters, so there’s no reason to panic over headlines. But we think these moves do contain some signal about where the trade war is heading, and that signal is mostly hawkish."

In corporate news, Amazon (NASDAQ:AMZN) kicks off its Prime Day, with estimates predicting a spike in digital shopping during the longer-than-usual four-day sales event.

Executives have said the extension was due to Prime members saying they needed more time to shop for deals.

During Amazon’s previous Prime Day in July 2024, American consumers spent $14.2 billion, or a rise of 11% year-over-year, according to figures from Adobe (NASDAQ:ADBE) Analytics cited by Reuters.

Hershey Co (NYSE:HSY) fell on reports that the firm had tapped Wendy’s Kirk Tanner to be its new chief executive starting Aug. 18. Tanner is set to take over the role from Michele Buck, who has been with the company for more than 20 years. 

SoFi Technologies Inc. (NASDAQ:SOFI) jumped to a fresh record high after the company announced its expansion into alternative investment, offering users access to private companies across sectors including AI, machine learning, and space technology.

The economic data slate is largely empty Tuesday, and the focus this week is on the minutes of Federal Reserve’s June meeting, which are due on Wednesday.

The Fed has maintained its stance on keeping rates steady until the inflationary effects of Trump’s tariffs become more clear. 

Peter Nurse, Ambar Warrick contributed to this article