Wall Street is on edge about tariffs

Did Trump start a trade war America will lose?
Did Trump start a trade war America will lose?

Wall Street is on edge about tariffs.

The Dow fluctuated in a 300-point range on Tuesday as investors bet on whether President Trump would follow through with plans to impose a 25% tariff on steel imports and a 10% tariff on aluminum. The Dow closed up nine points, and the S&P 500 and Nasdaq also finished slightly higher.

"As a number of trade issues develop in the coming weeks and months, markets may remain on edge and prone to bouts of volatility," Jeffrey Kleintop, chief global investment strategist at Charles Schwab, wrote in a note to clients.

House Speaker Paul Ryan dashed investors' hopes on Tuesday that he and top GOP leaders would put pressure on the Trump administration to abandon the plan. Ryan said in a press conference that he was open to "more surgical and more targeted" tariffs than Trump announced last week.

Related: Trump's relationship with big business hits another speed bump

Top American allies, including Canada and the European Union, have pledged to retaliate if Trump implements the tariffs. Investors fear Trump's step would set off a global trade war.

"If the trade antagonism intensifies, investor confidence will come under increasing pressure," said David Joy, Ameriprise Financial's chief market strategist.

Brad McMillan, chief investment officer at Commonwealth Financial Network, said the market's push and pull Tuesday was "natural." McMillan said he was encouraged by the market's response to Trump's threats on Twitter. The Dow lost 491 points on Thursday and Friday, but gained 336 points Monday.

"We had a trade war announced and markets didn't fall down," McMillan said. "I suspect the risks of a serious market pullback continue to be contained and will remain so until something more fundamental changes."

The Dow got an initial bounce Tuesday after South Korea's national security chief Chung Eui-yong said North Korea is willing to talk to the United States about giving up its nuclear weapons. Chung said the two Koreas would hold a summit next month, the first in more than a decade.

Growing tensions with North Korea have concerned investors.

"No question this is great to hear," Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note to clients.

— CNN's Joshua Berlinger and Jungeun Kim contributed to this report.

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