January 1, US Stocks Surge as Tariffs Hit Europe Hard

Wyatt’s Take

• American stocks ride high even with tariffs in play.
• Europe feels the squeeze from new US trade policies.
• Long-term effects could bring bigger changes for all.

US stock markets keep breaking records, boosted by Wall Street and big-name companies, even as tariffs spark rough waters for others. Europe’s markets struggle more, with major stock indexes lagging the US since tariffs kicked in.

Over six months, Europe’s main stock index grew about 8%, but America’s S&P 500 shot up 24% over the same period. Earlier this year, Europe kept pace, but it has since slipped behind as the tariff fight heated up.

In September, European prices were 2.6% higher than last year, beating Europe’s own targets but staying below the US’s 3% jump. That rate in Europe dropped again in October, with no fresh US numbers due to the government shutdown.

Economic growth in the EU last quarter was just 1.5%, half of what America saw. The euro is holding steady, but a strong currency makes exporting goods tougher for Europe’s companies.

Javier Noriega, a top economist, said,

“The headline news is that the tariffs have had a measurable impact so far, but not as big as what had been predicted by most economists back in April and May.”

Economies seemed sturdy so far, but there is worry about what comes next.

By Friday’s market close, the S&P 500 added 2.3% for October, the Nasdaq jumped 4.7%, and the Dow went up 2.5%. Still, not every US market hit new records, with the S&P 500 slipping 0.4% after its latest milestone.

Even if immediate damage seems slight, experts believe ongoing tariff shifts may hit harder in time. European industries like autos, farming, and steel have already seen profit drops and shaky business forecasts.

Germany’s carmakers, who send a big share of their vehicles to America, are feeling the heat. More government and household spending in Europe is helping for now, but many say that can’t last long.

Europe wants to avoid a deeper trade fight and is calling America back to the negotiating table. They want to set expiration dates for tariffs and look for new deals with other big trading nations, including China.

The European Central Bank faces tough choices: keep a lid on rising prices without choking off much-needed growth. As borrowing gets pricier, it could spell trouble if leaders move too quickly or slowly on interest rates.

“The ECB has been cautious,” Noriega said.

“If they tighten too fast, they could undo the resilience we’ve seen so far. But if they move too slowly, inflation could reaccelerate, especially if the tariffs lead to a new wave of supply shocks.”

Keep an eye on how tariffs change our jobs, prices, and what we bring home. For now, America’s markets are holding strong, but what comes next could touch every family’s pocketbook.

Wyatt Matters

America’s tough trade talks are keeping our economy strong, but anything can happen. Staying alert helps folks at the heart of the country stay prepared for change.

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