Live: Vanguard S&P 500 ETF (VOO) Ignores Tariffs, Rises on Bank Earnings
24/7 Wall St. Insights:
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China hiked tariffs on U.S. goods to 125% to match U.S. duties on Chinese imports and says trade between the two countries is now effectively dead as a result.
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The stock market is shrugging off the escalation and focusing instead on bank earnings. The Vanguard S&P 500 ETF (VOO) was up slightly at the morning bell.
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Another market reversal
The stock market is shrugging off the latest salvo between the U.S. and China over trade. All stock indices opened slightly higher at the morning bell, with the Vanguard S&P 500 ETF (NYSEARCA:VOO | VOO Price Prediction) up 0.7%.
China raised its tariffs on U.S. goods to 125%, matching the rate President Trump had imposed on Chinese imports. Beijing, though, said it no longer matters what further increases the U.S. hits it with as it will not respond because “Given that, at the current tariff level, U.S. exports to China are no longer commercially viable, China will not respond to any further tariff hikes by the U.S. on Chinese goods.”
With Trump having essentially eliminated the de minimis rule that Chinese marketplaces like Temu and Schein used to ship cheap goods to the U.S. duty-free, it’s not unreasonable to say trade between the U.S. and China is dead.
Big names bolster market
Although most components of the Vanguard ETF are down, the biggest components of the index are moving higher. Nvidia (NASDAQ:NVDA), representing the second largest position in the exchange-traded fund at over 6%, is up more than 2%, helping to drive the ETF higher.
Even though top dog Apple (NASDAQ:AAPL) is in the red, it is almost at break-even so its impact is negligible.
Yet some components are up strongly in morning trading. Broadcom (NASDAQ:AVGO), which is the eighth largest position, is up 3.4%. The AI chipmaker’s stock has held up better than most over the tumultuous week with shares 22% higher.
Banking on trading turmoil
What is buoying stocks this morning are the results of bank stock earnings starting to come in with giants like JPMorgan Chase (NYSE:JPM) reported record revenue on higher trading despite caution over economic headwinds. JPM stock represents 1.5% of VOO’s portfolio, just behind 10th place Tesla (NASDAQ:TSLA) at 1.6%. JPMorgan is up 2% in morning trading.
Other financial stocks in the Vanguard S&P 500 ETF that reported earnings today include Wells Fargo (NYSE:WFC) and Morgan Stanley (NYSE:MS), both of which had better than expected results.
Yet banks were also being very cautious and were setting aside larger amounts for credit losses. It suggests they foresee tougher times coming and are preparing for the worst.
JPMorgan’s provision for credit losses in the fourth quarter rose to $3.3 billion from $2.6 billion. Wells Fargo’s provision, however, was lower than expected. It set aside $932 million, less than the $1.2 billion Wall Street wass anticipating. Morgan Stanley’s credit loss provision was just $135 million, but it is markedly higher than the $6 million et aside in its year-ago first quarter.
After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, and Money Morning. He has been interviewed for both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
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