Most US stocks rise, but UnitedHealth's worst day in decades keeps Wall Street in check

Trump on Thursday offered some encouraging signals that negotiations with other countries could lead to lower tariffs, which is what Wall Street is hoping for.

The uncertainty about what will happen in Trump’s on-again-off-again rollout of tariffs, though, could damage the economy by itself. Federal Reserve Chair Jerome Powell helped send stocks lower Wednesday when he reiterated that Trump’s tariffs appear to be larger than the central bank was expecting, which could in turn slow the economy and raise inflation more than it had earlier thought.

That could set up a dilemma for the Fed. It could cut interest rates to help the economy, but that would also push inflation higher. It has no good tool to fix both at the same time. Powell said again on Wednesday that the Fed would wait to see how conditions play out more before moving on interest rates.

Trump criticized that stance Thursday, saying the Fed is “always TOO LATE AND WRONG.” He also said, “Powell’s termination cannot come fast enough!”

That could spook Wall Street. An independent Fed able to act without influence from the White House is one of the primary reasons the United States has benefited from its reputation as a safe place to invest. History suggests central banks with more autonomy tend to have economies with lower and more stable inflation.

Research also suggests Trump’s past attacks on the Fed in favor of lower interest rates may have helped drive expectations in financial markets for lower rates, which in turn may have had some influence on the Fed. But conditions are different this time around from when inflation was low during Trump’s first term.

“This request for lower rates could backfire if markets perceive that going forward the Fed will be less committed to low and stable inflation,” said Francesco Bianchi, an economics professor at Johns Hopkins University.

In the bond market, the yield on the 10-year Treasury rose to 4.32% from 4.29% late Wednesday. It had been easing for much of this week, following last week’s scary rise. That sudden climb last week had raised concerns that Trump’s frenetic moves in his trade war may be causing investors worldwide to lose faith in U.S. investments as the world’s safest.

Reports Thursday morning came in mixed on the U.S. economy. One said fewer U.S. workers applied for unemployment benefits last week than economists expected. That’s the latest signal that the job market remains relatively solid. But a second report said manufacturing in the mid-Atlantic region unexpectedly flipped to contraction from growth.

In stock markets abroad, indexes slipped 0.6% in France and 0.5% in Germany. The European Central Bank cut its main interest rate, which is something that often pushes stock prices higher. But investors worldwide had already been expecting the move for a while.

In Asia, indexes were stronger. Stocks rose 1.6% in Hong Kong and 1.3% in Japan.

___

AP Business Writers Yuri Kageyama and Matt Ott contributed.