U.S. stocks closed strongly higher on Tuesday, despite experiencing volatility during the trading session, as investors evaluated the latest round of corporate earnings, economic data, and changes in trade policy. U.S. Treasury Secretary Besent hinted at progress in trade agreements with countries like Japan and India. Additionally, the Trump administration signed an executive order before Tuesday's close allowing automakers to deduct up to 15% of import duties on parts based on the total value assembled domestically. This move aims to give automakers time to shift supply chains back to the U.S., but the news did not significantly impact the market reaction. General Motors' shares closed down 0.6%, despite strong quarterly results and the withdrawal of its annual forecast.
Meanwhile, Honeywell reported an increase in first-quarter adjusted profit, sending its stock up 5.4%, and coatings manufacturer Sherwin-Williams also surged 4.8% as its quarterly profit beat expectations. These companies provided a significant boost to the Dow, especially Coca-Cola, whose revenue and profit exceeded expectations, with its share price ending up 0.8%. However, Ameriprise Financial's chief market strategist Anthony Saglimbene indicated that assessing the full impact of tariffs might be challenging in the coming one to two months. Many companies most affected by tariffs are lowering forecasts or pausing guidance altogether.
Economic data shows that the U.S. goods trade deficit widened to a record level in March, as businesses engaged in large-scale imports ahead of President Trump's comprehensive tariffs. Additionally, the Conference Board reported U.S. consumer confidence fell to its lowest point since May 2020, although job vacancies still indicated relative stability in the labor market.
Despite the year-to-date performance of the three major indices lagging behind last year's end, the stock market has shown some signs of stabilization in recent weeks. The S&P 500 index rose for the sixth consecutive trading day, marking the longest winning streak since November last year. The upcoming government employment report on Friday and the earnings from tech giants, especially Apple and Microsoft, are likely to be the focus for investors.
In other corporate news, UPS shares fell 0.4% after the company announced plans to cut 20,000 jobs and reduce its delivery services for Amazon. Wells Fargo announced a share buyback plan of up to $400 billion, with its stock rising 2.4%. Meanwhile, HSBC lowered its year-end target for the S&P 500 index from 6,700 points to 5,600 points, reflecting a cautious market sentiment.
