Market Optimism Rises on Tariff Hike Report
US stock futures surged across the board on Tuesday, driven by a report that the incoming Trump administration may implement tariff increases gradually, rather than all at once. This news brought relief to investors, who had been bracing for a potential inflation spike.
Tariff Rollout Strategy
According to Bloomberg, President-elect Donald Trump’s team is considering a month-by-month rollout of promised tariff increases, aiming to prevent sudden inflation spikes. This approach could help mitigate the impact on the economy and give the Federal Reserve more room to maneuver on interest rates.
Market Reaction
The news sent S&P 500 futures up roughly 0.3%, while Nasdaq 100 futures gained 0.4%. Dow Jones Industrial Average futures also rose 0.2%, building on Monday’s gains. The dollar retreated from its five-day winning streak, and the 10-year Treasury yield pulled back from 14-month highs.
Inflation Concerns
Despite the optimism, gradual tariffs could still pose challenges for the Federal Reserve’s efforts to control inflation. A UBS strategist warned that even a gradual rollout could be “problematic” for the central bank.
Economic Data Ahead
Later today, the release of December’s producer price index will provide a key indicator of wholesale inflation. This will set the stage for Wednesday’s highly anticipated consumer inflation report.
Corporate News
Shares of KB Home jumped almost 10% in pre-market trading after the home builder’s fourth quarter earnings beat estimates.
Other Key Stories
- BlackRock is working to avoid controversy as the GOP takes power
- Biden plans to issue an executive order to ensure power for AI data centers
- Trump’s team is eyeing gradual tariff hikes to avoid inflation spikes
- Rising bond yields are causing concerns for stocks
- Trump wants to “save” TikTok, with Elon Musk as a potential rescuer
- Starbucks is limiting cafe and bathroom use to paying customers
- Goldman Sachs estimates that insured losses from the Eaton and Palisades fires could reach $10 billion to $30 billion, making them the most destructive wildfires in California history.
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