Tariffs Impact: How Biden's Trade Policies are Reshaping Stock Markets

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This week, it wasn't just meme stocks that made a comeback.

Clean energy stocks that were previously struggling have shown a strong rally this week. The iShares Global Clean Energy exchange-traded fund, which includes sectors such as renewable electricity, semiconductors, and solar energy, has seen a gain of around 3%. Specifically, Plug Power shares have surged by 33%, Enphase Energy shares have increased by 8%, and NextEra Energy shares have gone up by 4%.

The reason behind this surge in clean energy stocks is attributed to President Joe Biden's decision to raise tariffs on $18 billion worth of Chinese imports. The sectors affected by these tariffs include steel, aluminum, electric vehicles, solar cells, and medical products. According to CNN's Kayla Tausche, the new tariff rates vary from 100% on electric vehicles, 50% on solar components, to 25% for other sectors.

A senior Biden administration official emphasized the importance of having multiple countries produce clean technology for the world. Diversified production of critical goods and technologies is necessary for resilient supply chains and clean technology. China alone cannot meet the global demand.

Clean energy stocks faced challenges last year due to supply chain disruptions and high interest rates. Companies trying to expand faced increased borrowing costs. Despite hopes for increased US government spending on climate solutions to boost the sector, the outcome was not as anticipated.

Higher rates can make it harder for consumers to switch to clean energy, like installing a solar system at home, which can be expensive and require a loan. Despite hopes for rate cuts by the Federal Reserve, rates remain at a 23-year high.

While some investors believe tariffs may keep boosting clean energy stocks, others caution that the recent surge is not solely due to improving fundamentals. It is also influenced by traders taking on more risk in their portfolios as the stock market continues to reach new highs.

According to Steve Sosnick, chief strategist at Interactive Brokers, the investment thesis in the sector has improved post-tariffs. However, it's important to note that not all companies in the sector are in the clear.

This week, Wall Street has shown a strong appetite for risk. Meme stocks like GameStop and AMC Entertainment have experienced significant fluctuations. This was triggered by the return of the Roaring Kitty X account, managed by Keith Gill, a trader who played a role in the 2021 meme stock frenzy. Meme stocks are known for their volatile nature, influenced more by social media popularity than by their financial performance.

The Dow Jones Industrial Average briefly reached above 40,000 for the first time on Thursday, thanks to a positive inflation report, according to my colleague Nicole Goodkind.

The blue-chip index reached a significant level in the morning but dropped below it later on, closing at 39,869 with a 0.1% decrease of 38 points.

On Thursday, all three major indexes finished lower. The S&P 500 was down by 0.2% while the Nasdaq Composite saw a 0.3% decline by the end of the day.

The markets reached new record highs on Wednesday following the release of the latest Consumer Price Index. This report indicated a slowdown for the first time in several months, leading to speculation that the Federal Reserve may begin reducing interest rates in September.

According to the Bureau of Labor Statistics, the inflation report revealed a 0.3% increase in prices on a monthly basis. This growth rate was slower compared to the previous two months and fell below the 0.4% monthly increase that economists had anticipated based on FactSet consensus estimates.

April retail sales came in weaker than expected, indicating a slowdown in consumer spending, which is a key driver of the economy. Economists had projected a 0.4% increase in spending, but this target was missed. Gary Pzegeo, head of fixed income at CIBC Private Wealth US, noted that the latest Consumer Price Index (CPI) report is positive news after four months of less favorable data. This, combined with the weak retail sales, is seen as supporting a potential rate cut by the Federal Reserve in the fall. The market is already pricing in a rate cut in September, with expectations of a second cut by December.

Read more here.

Damaging hacks expose the weak underbelly of America’s health care system

Recent ransomware attacks have caused chaos for two major American health care firms, affecting patient care and highlighting vulnerabilities in the US health care system's defenses against hackers. Federal officials and cyber experts have been working to minimize the impact and restore computer systems. However, the widespread consequences of the attacks, such as ambulances being redirected and pharmacies unable to process insurance claims, have brought attention to the lack of preparedness in the health care system for cyberattacks. This has prompted calls for new security regulations from US lawmakers, senior Biden administration officials, and policy experts.

Health care is behind other industries like big financial institutions and energy providers in terms of IT security, experts say.

According to cybersecurity expert Joshua Corman, the industry has been asking for voluntary cybersecurity measures for years, but this is all they have received.

Sen. Ron Wyden, the Democratic senator from Oregon who leads the finance committee, emphasized the importance of implementing mandatory cybersecurity standards in the healthcare industry. He particularly highlighted the need for these standards in the largest companies that serve millions of patients with care and medicine.

According to Sen. Wyden, without taking action, patients' access to healthcare services and the security of their personal health information will continue to be at risk of compromise and ransom by hackers repeatedly.

Read more here.

Editor's P/S:

The article provides a comprehensive overview of the recent surge in clean energy stocks, attributed to President Biden's decision to raise tariffs on Chinese imports. The tariffs, which range from 100% on electric vehicles to 25% on other sectors, aim to diversify production of critical goods and technologies and reduce reliance on China. While some investors believe the tariffs will continue to boost clean energy stocks, others caution that the surge may not be solely driven by improving fundamentals.

The article also highlights the challenges faced by clean energy stocks last year due to supply chain disruptions and high interest rates. Higher rates make it harder for consumers to switch to clean energy, as installing a solar system at home can be expensive and require a loan. Despite hopes for rate cuts by the Federal Reserve, rates remain at a 23-year high. The article concludes by discussing the recent ransomware attacks on two major American health care firms, exposing the weak underbelly of the country's health care system's defenses against hackers. These attacks have prompted calls for new security regulations from US lawmakers, senior Biden administration officials, and policy experts.