The US stock futures are showing an upbeat continuation of August 6’s closing stock market rally. The S&P 500 futures have increased by 0.6% which indicates potential gains for major indexes in Thursday's trading session.
This is after President Donald Trump announced a new 100% levy on imported semiconductors to enhance manufacturing within the country. Nonetheless, firms constructing or committed to building in the US will not be affected by the tariff, which is an opportunity for relief to companies such as Apple.
In a bid to strengthen US manufacturing, President Trump unveiled a 100% tariff on imported semiconductors and chips. However, companies operating within the United States, such as Apple, will be exempted from the tax. Trump emphasized that companies with committed investments in US manufacturing would face no tariff charges.
"The good news for companies like Apple is if you're building in the United States or have committed to build, without question, committed to build in the United States, there will be no charge," he stated.
Apple was optimistic about the announcement. Tim Cook, the CEO, said that the company intends to invest an additional $100 billion in the US within four years, in addition to the $500 billion pledged earlier this year. As a result, Apple shares have surged by 2.8% in pre-market trading.
The tariff carveout has boosted companies with substantial manufacturing operations in the US, although it has caused volatility among other semiconductor companies. For instance, Intel shares have dropped by 3.1% following the news that President Trump called on Intel’s CEO to resign. This sentiment is a direct result of the semiconductor trade tensions and Trump's criticism of the company’s leadership.
As stocks are likely to move higher, there are other market dynamics worth noting. The Labor Department’s report on initial jobless claims showed a slight increase in unemployment claims. Claims increased by 7,000 to 226,000 as the week ended on August 2, reaching a level higher than economists expected. Although the growth is minimal, it points to continuous insecurity in the labor market.
Conversely, on a more positive note, another report showed that labor productivity increased significantly in the second quarter. This positive development offsets the increasing jobless claims and suggests that the economy may be doing well even amid the challenges created by ongoing tariff disputes.
Globally, Asian stock markets also showed positive movements, with Japan’s Nikkei 225 rising 0.7% and China’s Shanghai Composite Index rising by 0.2%. Europe has been more mixed, with the German DAX Index soaring 1.6% while the UK's FTSE 100 declining 0.8%.
While the semiconductor tariff may benefit US manufacturers in the long term, it comes at a cost to international trade relationships. The new tariffs have excluded countries like Taiwan and South Korea, and their effect includes major businesses like TSMC and Samsung Electronics. Other countries are, however, rushing to secure exemptions before the August 7 deadline, which could result in additional tariffs for countries without a deal.
Trade tensions are still a concern, weighing on market sentiment on the broader economy and influencing consumer spending due to tariffs. Analysts warn that though the tariffs aim to boost US manufacturing, they might also have adverse effects on international trade relations and economic stability in the long run.
As shareholders monitor these trends, corporate earnings reports continue to be a major topic of interest. With the second quarter earnings forecasted to grow a massive 12.1%, compared to a prior expectation of 5.8% in July, the corporation's outlook appears to be optimistic, which should support market optimism despite the tariff uncertainty.
Also Read: Stock Market Today: Nifty Below 24,450 Amid Trump Tariffs and US-India Trade War