Market Optimism Boosted by Trump’s Softer Stance on China Tariffs
US Stocks End Week on High Note
Despite a sluggish start on Friday, US stocks are poised to end the holiday-shortened week with gains above 2%. The Dow Jones Industrial Average and S&P 500 indices are set to close higher, while the tech-heavy Nasdaq Composite has ticked up 0.2%. This optimism is largely attributed to President Trump’s hints at a softer stance on China tariffs, which has eased fears of a potential trade war.
Earnings Season Off to Strong Start
The strong start to earnings season has also contributed to the market’s positive sentiment. Verizon and American Express both reported strong results on Friday, setting the tone for next week’s big tech earnings. However, a key test lies ahead as investors await results from major players in the industry.
Oil Prices Gain, But Still on Track for Weekly Loss
Oil prices rose on Friday, but are still set to end the week in the red. This volatility is largely due to Trump’s demands that OPEC bring down the cost of crude. Meanwhile, gold prices closed in on a record high as the dollar pulled back, making the metal cheaper.
Housing Market Sees Solid Recovery
Existing home sales rose 2.2% in December to a seasonally adjusted annual rate of 4.24 million, marking the strongest pace since February 2024. This solid recovery is attributed to high mortgage rates and elevated home prices. Despite expensive housing costs, some house hunters are still hesitant to enter the market.
Dollar Index Falls from Recent High
A less aggressive tariff stance from President Trump has pressured the US dollar, pulling it down from recent highs and boosting other currencies. The dollar index has fallen from its recent high earlier this month, but has still gained about 7% from the lows of September.
Economic Data Ahead
Investors will be keeping a close eye on preliminary readings on US manufacturing and services activity in January, as well as the University of Michigan consumer sentiment index. These reports will provide valuable insights into the state of the economy ahead of the Federal Reserve’s policy meeting next week.
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