U.S. Markets Ignore Tariff Worries: 5 Top-Ranked Picks

Wall Street shrugged off early losses on Sep 18 to close in the green as investors chose to ignore trade tensions. Stocks moved north after the latest tariffs from the United States and China were less harmful than expected.  

Consumer discretionary and industrials stocks emerged as the leading performers. Tech shares also gained after the likes of Apple, Inc. (AAPL - Free Report) gained a reprieve from Trump’s latest tariffs.

The day’s trading indicates that investors are continuing to focus on the robust economy and strong earnings, which have been the driving force behind markets for some time now. With the market rally set to continue, ignoring intermittent jitters, it makes sense to invest in stocks that have made strong gains year to date and bear strong fundamentals.

Tariff Barbs Less Harmful Than Expected

On Sep 17, the Trump administration announced that it was imposing a 10% tariff on Chinese imports worth $200 billion, effective Sep 24. From Jan 1, 2019, the rate imposed will rise to 25%. If China decides to retaliate, the administration will impose “tariffs on approximately $267 billion of additional imports.”

On Sep 18, China retaliated by imposing a 10% tariff on U.S. goods worth $60 billion, also effective Sep 24. The measure targets more than 5,000 U.S. products. However, the rate levied is much lower than the 20-25% band that was discussed earlier.

Investors took the view that things could have been far worse and this is possibly why stocks rallied. The Dow gained 0.7% to close in the black for the fifth session out of six. The S&P 500 gained 0.5%, ending 0.5% lower than a record high.

Additionally, the United States has also chosen to exclude nearly 300 items from an earlier list of goods, which would attract such duties. This includes smartwatches from Apple and Fitbit Inc (FIT - Free Report). Consequently, shares of Apple and Fitbit gained 0.2% and 6.4%, respectively. This helped the Nasdaq gain 0.8%.

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