Calm before the decision: Dow Jones regains momentum amid Trump’s tariff escalation and Fed silence

The Dow Jones Industrial Average began regaining its footing by the end of the week, having stumbled earlier under the weight of fresh tariff threats that pushed markets back into a cautious stance. But as has often been the case in the Trump era, threats are one thing—implementation is another. When the signals multiply and the messages get tangled, anticipation becomes the rule, and overreaction the exception. 

This latest wave of escalation, spearheaded by the U.S. president, included explicit threats of tariffs as high as 50% on copper and Brazilian imports, along with double-digit duties aimed at goods from Japan and South Korea. Yet with the effective date postponed until August 1, traders saw less of a declaration and more of an opening for negotiation. The result? A swift recovery in the index and renewed confidence that the brinkmanship won't translate into immediate trade action. 

The economic data helped sustain this mood. U.S. jobless claims came in steady, with no surprises or surges, reinforcing investor confidence in the labor market’s resilience despite political turbulence. The 227,000 new filings didn’t shift the broader narrative but gave markets another reason to stay positive. 

As the week wound down, a few voices within the Federal Reserve began showing openness to interest rate cuts—even if the majority remains firmly on the sidelines. The latest FOMC minutes revealed growing divergence among policymakers, a gap that hasn’t gone unnoticed by the markets. And while President Trump continues his public pressure campaign on Jerome Powell to speed up rate cuts, the Fed Chair maintains his wait-and-see posture, even amid renewed trade tensions. 

Against this backdrop, liquidity returned to U.S. equities, with the Dow Jones reclaiming most of its recent losses, settling around 44,700—just steps away from its record high at 45,000. Not because the threats have disappeared, but because markets have chosen, for now, to see the glass as half full: no tariffs yet, and a monetary policy path that may eventually pivot under the weight of evolving data. 

This current calm doesn’t mean risks are gone. But it does signal a market temperament that’s grown more flexible. As long as the tariffs remain unexecuted, and the Fed stays in observation mode, the door remains open for the Dow to inch its way toward new highs—amid an increasingly complex economic and political landscape. As always, the market prefers to tune out the noise—until it feels the sting.