1. Trump announced tariffs on Mexico, Canada, and China, raising inflation worries. 2. Inflation expectations have jumped to 2.84%, with potential for 3% in 2025. 3. Delayed tariffs show market's hope that these are just negotiation tactics. 4. The Fed may miss its 2% target, impacting interest rates and markets. 5. Continued tariffs could push inflation above 3%, affecting consumer prices.
The announcement of tariffs increases inflation expectations, which could negatively impact stock prices. Higher inflation may lead to tighter monetary policy, impacting the DJIA similar to reactions in 2018.
The tariffs could significantly affect market stability and inflation expectations, thus influencing DJIA performance. Previous tariffs under Trump had notable market impacts, indicating this could too.
If inflation remains high, it could lead to sustained interest rate hikes affecting the DJIA over a longer period, as seen during the 1970s inflation crisis.