• Traders seem untroubled by the possibility that tariffs’ return to the spotlight could lead to another market crash. As stocks rose, Nvidia became the first company ever to reach a market cap of $4 trillion. 

Stocks rose on Wednesday after two days of declines. Those downturns proved to be little more than blips in the continuous—albeit choppy—march the stock market has had since its recent nadirs in April. Meanwhile, tech juggernaut Nvidia hit a historic new $4 trillion milestone.

The S&P 500 rose 0.6%. The tech-heavy Nasdaq climbed 0.9%. While the Dow Jones ticked up 218 points, good for a 0.5% increase, after taking the worst of the two-day slump. 

Traders seemed to ignore this latest round of tariff news—a stark contrast to their reaction in April when President Donald Trump’s initial burst of tariff policies caused a broad market selloff that hit equities, the U.S. dollar, and the bond market. When tariffs returned to the forefront right before the July Fourth holiday last week, investors had already braced themselves. Markets dipped a little but stayed largely in the range of their recent highs. 

Wednesday, July 9 marked the deadline for a 90-day pause on tariffs. However, Trump has since extended the deadline to Aug. 1. On Wednesday, the president sent “tariff letters” to seven new countries including the Philippines, Moldova, and Brunei. 

Asian markets were mostly down on the news of renewed tariff policies. Shanghai’s SSE Composite dipped 0.13%. Stocks in Hong Kong dropped 1.06% during the session. The ASX 200 and the Nifty 50 slipped 0.61% and 0.18% respectively. A rare bright spot was the Nikkei, which is up 0.33% on the day. 

Nvidia’s historic $4 trillion market cap

Back in the U.S., stock market darling and semiconductor juggernaut Nvidia became the first company with a $4 trillion valuation. 

Shares rose 1.8% on Wednesday hitting a share price of $162.86. Nvidia became the poster child for the AI market rally that led the S&P 500 to back-to-back years of more than 20% growth. 

The company’s shares shot up as soon as markets closed. Investors were eager to scoop up shares after they fell slightly over the past week. After that initial exuberance, the price tailed off before plateauing around 11 a.m. Shares remained stable throughout the rest of the session. 

Nvidia beat other legendary tech giants Apple and Microsoft to the $4 trillion mark. Since the start of the year, Nvidia’s stock is up 17%—though that proves a relatively calm performance for the chipmaker, which has seen its stock rise 1,453% over the past five years.

This story was originally featured on Fortune.com

© Chesnot—Getty Images

• The chances the Federal Reserve will cut interest rates by 50 basis points in December are growing, according to Oxford Economics. The June jobs report showed strong headline numbers, but the underlying data pointed to a weakening labor market. If it cratered unexpectedly the Fed would be forced into such a large rate cut.   

Interest rate cuts will be a crystal ball. 

Amid a cloudy outlook, they’ll reveal either good economic fortune or a downturn. 

On the one hand, interest rate cuts could mean the Federal Reserve has finally deemed the threat of inflation has passed and economic forecasts stable again after the tariff-induced uncertainty. That is the outcome investors and President Donald Trump would most welcome. But until any of that uncertainty subsides, interest rates will remain where they are. 

There is, however, one scenario, in which rate cuts aren’t a sign of eagerly awaited relief but of the start of a long-feared downturn. In the event the labor market suddenly starts to go south, the Fed would have to step in and cut rates. In that case, investors and the president would get more than they bargained for: an interest rate cut of 50 basis points. 

A rate cut of that size, double the usual 25 basis points, would only come if unemployment spiked and companies stopped hiring later in the year. The Fed started its holding pattern, largely worried Trump’s tariffs would reignite inflation. But in recent weeks, there has been a greater focus on unemployment—the other side of its dual mandate. Investors, too, are worried the labor market may be teetering. 

“We think the risk is growing that the first cut is 50 basis points,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. 

Oxford Economics still forecasts a single rate cut of 25 basis points in December. But the fact the firm is entertaining a jumbo rate cut points to genuine fears the bottom may fallout from the labor market quickly, even dramatically. It’s the nature of the labor market slump that matters more than anything else. 

If it is “unexpected in a shock kind of way, that would motivate a 50-basis-point reduction at the end of the year,” said Jose Torres, senior economist at Interactive Brokers. “You would need things to go bad really quickly towards the end of the year for that to happen.”

If the bad news is swift and severe, then the Fed will have to scramble. 

“We do see a growing risk that the first move is larger, i.e. 50 basis points, because we think the Fed at that point may have some catching up to do” with the labor market, Vanden Houten told Fortune. 

The current labor market is remarkably stable despite the market turbulence that surrounded the original tariff announcements in April. Under the surface, though, there are some subtle changes indicating it is loosening. In June, the unemployment rate actually ticked down to 4.1% from 4.2%, according to data from the Bureau of Labor Statistics. That headline number—which came alongside 147,000 new jobs—belied slowing momentum in the job market. Private sector jobs grew at the lowest level in eight months; 130,000 people dropped out of the labor force; and individuals out of a job were staying unemployed for longer. 

Those nuances don’t point to a labor market in imminent danger, but one that is shifting beneath the economy’s feet.

“The numbers aren’t horrible, allowing the Fed to focus more on inflation right now,” Vanden Houten said. “The latest data allow the Fed to breathe a little easier, although there were definitely some quirks in the June employment data that probably made the labor market look a little better than it is.”

Economic growth would have to significantly underperform expectations and hiring levels would need to be below 50,000 a month in October and November for the economic picture to worsen quickly enough to force a 50 basis point cut, according to Torres. 

The possibilities of both happening are unlikely at the moment. Investors expect growth and the labor market to slow later in the year, but not to those levels. Wall Street firms and economists lowered their forecasts for year-end growth and raised those for inflation, mainly citing tariffs. Some have revisited those projections, lowering them further, as Trump’s looming tariff deadline looms. 

That said, markets have remained steady amid a renewal of Trump’s tariff whirlwinds. Markets seem to have largely already priced Wall Street’s lower forecasts for the rest of 2025. In fact, markets were largely unmoved earlier this week as Trump announced a series of new and possibly definitive tariffs on a host of countries—all of which came after the S&P 500 hit a new all-time high at the start of July.

This story was originally featured on Fortune.com

© Al Drago/Bloomberg

• Investors are willing to “look through” the risks of President Donald Trump’s new batch of tariffs set to take effect on Aug. 1 because they just see them as negotiating tactics, experts say. But tactic or not, current tariff rates are more than six times where they were at the start of the year.  

Markets are largely ignoring the possibility a new round of tariffs could tank stocks like they did in April. 

President Donald Trump issued another extension to his tariff policy that is now set to go into effect on Aug. 1. Several countries, including major trading partners like South Korea and Japan received “tariff letters” on Monday, which informed them of their new tariff rates on their goods. The president also said more letters will be sent on Tuesday and Wednesday. 

Countries issued letters would see the new tariffs replace those Trump originally announced on April 2. 

Trump’s sudden tariff announcements earlier this year tanked markets. Now with the same possibility looming, some markets are at all-time highs. It appears markets are not just pricing in the risk, but perhaps ignoring it all together.  

“At some point, the rubber has to hit the road, and there’s risks that reciprocal tariffs with the major trading partners could revert back to at or around the April 2 levels, and that could sort of be a headwind for markets,” said Nadia Lovell, UBS global wealth management senior U.S. equity strategist, during a media briefing on Tuesday. “But for now markets are willing to sort of look through this risk.”

And look through it they have. 

Last week, the S&P 500 hit an all-time intraday high of 6,284.65. As of Tuesday, it’s only about 50 points off from that record. Markets did roar back from a low in early April, largely because the U.S. was inching its way toward a trade policy investors deemed stable. They also got more accustomed to the herky-jerky nature of the White House’s tariff policy.   

“Over the last couple of months, we’ve seen the administration escalate, only to quickly de-escalate, and this could also just be another tactical escalation in some way,” Lovell said of the latest deadlines.

In investment circles, this phenomenon has been referred to as the “Trump put,” a reference to options trading. It’s an investment thesis arguing Trump always reverses course on policies that hurt the stock market; therefore, any dip is temporary and a buying opportunity.  

That’s not to say markets have been completely immune from the uncertainty tariffs pose. The Dow Jones and the S&P both sank on Tuesday for the second consecutive day.

So far, Trump has shown some predisposition to turn away from his harshest tariff policies. The numerous deadline extensions and pauses helped assuage investors the final versions of any tariffs wouldn’t be as sweeping as their first drafts. There have also been several carve-outs for certain industries such as chips, critical minerals, and some pharmaceuticals. However, Trump pledged there would be no extensions to the Aug. 1 deadline. 

Even with the current pause, overall tariff rates for imports into the U.S. are more than six times higher than they were at the start of the year. The average weighted tariff rate is 16% compared to 2.5% in 2024, according to UBS calculations. If all of the postponed tariffs were to be reimplemented, that rate would rise to 21%. 

Across Wall Street, financial institutions have been recommending clients diversify away from U.S. equities, despite having rebounded since April. Many money managers are moving more of their portfolio into some European stocks, which for years had lagged behind their U.S. counterparts. The U.S. markets, these investors reason, are still subject to the vicissitudes of a tumultuous trade policy. 

“Nothing that happened yesterday should be taken to mean that we’re near the end to the U.S. tariff story of 2025,” wrote Thierry Wizman, Macquarie global foreign exchange and rates strategist. “Leaving aside that ‘reciprocal tariffs’ still need to be resolved, there are also new ‘strategic tariffs’ to look forward to this year.” 

Raising tariff levels would also see the U.S.’ growth forecasts fall lower than they already have. In the earliest days of Trump’s tariff policy, U.S. recession odds soared. Forecasters from Wall Street and the Federal Reserve cut their projections for GDP growth and raised those for inflation and unemployment. The median growth rate for the U.S. among Fed economists is now at 1.4%. UBS’s 2025 projection is lower, coming in at 0.9%, according to Chief U.S. Economist Jonathan Pingle. 

If all of the April tariffs were to return, the U.S. might lose “another three tenths” of its annual growth rate, Pingle said. 

“Under that scenario, recession probabilities are going to rise, and it’s going to feel like pretty sluggish growth,” he said. “I mean, the U.S. does not run sub 1% growth very often.”

This story was originally featured on Fortune.com

© Spencer Platt/Getty Images