Market Optimism Returns as Trump Softens Stance on Tariffs
President Donald Trump’s return to the White House on Tuesday brought a sense of relief to Wall Street, as his softened stance on tariffs eased fears of a blanket trade war. Economists breathed a sigh of relief as Trump instructed the government to explore multiple avenues and options, rather than imposing broad and immediate tariffs.
A Narrow Window for Concessions
Trump did suggest 25% tariffs on Mexico and Canada could be implemented by February 1, but this gives those countries a small window to make concessions or commitments to avoid them. According to Morgan Stanley, public policy choices are unlikely to significantly impact the economic outlook until later this year.
Market Reaction
As of 10:20 AM ET, the S&P 500 index rose 0.33% to 6,016.59, while the Dow climbed 0.65% to 43,770.74. The Nasdaq, however, dipped 0.12% to 19,606.72. The 10-year Treasury yield slipped to 4.576%. Oil prices fell around 2% as Trump pushed for increased energy production.
Tech Stocks Shine
Tech giants Meta, Alphabet, and others saw their shares rise in early trading, likely due to their prominent presence at Trump’s inauguration. Tesla’s shares, however, fell over 4% despite being up around 70% since Trump’s presidential win.
TikTok’s Uncertain Future
Over the weekend, TikTok experienced a brief outage due to a law requiring the Chinese-owned app to be sold to a non-Chinese entity. Trump’s executive order halting enforcement of the law for 75 days brought temporary relief, but Facebook’s Instagram is reportedly offering TikTok content creators a significant amount of money to switch platforms.
Cryptocurrency Market Volatility
Bitcoin and other cryptocurrencies fell on Monday after Trump failed to issue any crypto-related executive orders. However, by 10:31 AM ET, bitcoin had started to recover, rising 1.6% to $103,669.20. Trump’s new crypto token, which soared to over $10 billion in market value on Monday, has since fallen.
Earnings Season Off to a Strong Start
Last week, major U.S. banks reported strong quarterly results, setting a positive tone for earnings season. This morning, corporate news included:
- Charles Schwab: Reported fourth-quarter results that topped Wall Street estimates, boosted by the integration of TD Ameritrade and client activity following the election. Shares rose over 7.5%.
- DR Horton: Topped analysts’ earning estimates, citing customer incentives such as mortgage buydowns as a driver of demand. Shares were fractionally higher.
- 3M: Rose 5% after reporting quarterly sales and earnings per share that both exceeded expectations.
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