Stocks rose higher on Tuesday as positive economic data helped ease ongoing macroeconomic concerns stemming from President Donald Trump's tariffs. However, the OECD issued a warning Tuesday that those tariffs could impact global economic growth.
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The Organization for Economic Co-operation and Development (OECD) cut its U.S. growth outlook to 1.6% for the year and 1.5% in 2026, down from its previous 2.2% expansion outlook for 2025 issued in March. The downgrade was driven by economic policy uncertainties from Trump's tariff, alongside a slowdown of net immigration and a smaller federal workforce.
The OECD also expects global GDP growth to "slow from 3.3% in 2024 to 2.9% this year and in 2026" added that the slowdown is "concentrated in the United States, Canada and Mexico."
"The global outlook is becoming increasingly challenging," the report said. "Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist."
The Trump administration has reignited tariff concerns amongst investors in recent days, as tentative deals with China and the European Union appear to be dissolving. On Tuesday, Reuters reported that the White House is asking countries to give their best proposal offers by Wednesday, citing a draft letter to trading partners from the office of the United States Trade Representative, as the administration's self-imposed tariff pause deadline is just a few weeks away.
Federal Reserve Governor Lisa Cook said in a speech delivered to the Council on Foreign Relation in New York on Tuesday that Trump's trade policies could impact the labor market and hinder the central bank's progress on inflation.
"Price increases tied to changes in trade policy may make it difficult to achieve further progress in the near term," Cook said. "The recent post-pandemic experience with high inflation could make firms more willing to raise prices and consumers more likely to expect high inflation to persist."
Cook's remarks come as Fed policymakers are set to meet again in June, with the market broadly expecting the central bank to hold interest rates before issuing a cut in September, according to CME Group's FedWatch tool.
Offering a bright spot on Tuesday, U.S. job openings rose at a more-than-expected rate in April, the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) showed. Available positives totaled nearly 7.4 million for the month, increasing by 191,000 from March, as hirings rose higher and quits edged lower.
The report comes ahead of the Labor Department's "official' jobs report for May, which is expected to show the addition of 125,000 private payrolls and the unemployment rate remaining steady at 4.2%.
Rounding out the earnings season, Dollar General
Chief Financial Officer Kelly Dilts said during the company's earnings call that the new guidance assumes that Dollar General will be able to offset "a significant portion of the anticipated tariff impact on our gross margin, but also allows for some incremental pressure on consumer spending." Chief Financial Officer Todd Vasos added on the call that while store traffic shows more middle- and higher-income customers, its core consumer, or low-income Americans, "remains financially constrained" in the current economic environment.
Market participants will turn their attention towards the ADP's employment report for May on Wednesday for more signs of labor market stability; the report is expected to show 110,000 private payroll additions. Earnings reports from companies including CrowdStrike
