US Stocks Rebound Despite Trump's Tariff Threats
U.S. stocks surged on Monday, shrugging off President Trump's latest tariff threats. The Dow Jones Industrial Average (^DJI) gained nearly 0.4% after posting its worst loss in nearly four weeks on Friday. The S&P 500 (^GSPC) rose approximately 0.6%, while the Nasdaq Composite (^IXIC) jumped almost 1%.
Investors initially reacted positively to Trump's pledge to introduce additional 25% tariffs on steel and aluminum from all countries, with an official announcement expected on Monday. Steel-related stocks, including Cleveland-Cliffs (CLF), Nucor (NUE), and U.S. Steel (X), all rallied. Aluminum producer Alcoa's (AA) stock also gained.
Markets Brush Off Trade Concerns
Despite the tariff announcements, markets appeared to be unfazed, suggesting that investors may be growing accustomed to Trump's aggressive trade rhetoric. Some analysts believe that many now view the announcements as mere negotiation tactics.
Inflation Concerns Linger
However, markets remain concerned about the potential impact of the escalating tariff war on inflation. If tariffs continue to rise, they could drive up inflation, potentially halting interest rate cuts. The January Consumer Price Index reading due on Wednesday will be closely watched for clues, alongside the week's updates on retail sales.
Corporate Earnings in Focus
This week, 78 S&P 500 companies are set to report earnings. McDonald's (MCD) shares rose after same-store sales grew, exceeding expectations. Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB) are among the companies scheduled to release earnings this week.
Trending Tickers
* Super Micro Computer (SMCI): Shares soared 15% ahead of a critical business update as investors focus on recent financial accounting challenges.
* Monday.com (MNDY): Shares surged over 25% after reporting fourth-quarter earnings that surpassed Wall Street expectations, prompting plans to intensify artificial intelligence efforts in 2025.
* Cleveland-Cliffs (CLF): Shares jumped 15% following Trump's announcement of a 25% tariff on steel and aluminum imports.
Other Key Developments
* Musk Suggests Scrutiny of Fed: Elon Musk called for closer examination of the Federal Reserve in social media posts ahead of Fed Chair Powell's congressional testimony.
* Tech Growth Concerns: The "Magnificent Seven" tech trade, which includes Meta (META), Amazon (AMZN), and Nvidia (NVDA), has underperformed, with only Meta posting double-digit gains year-to-date.
* Nvidia Rebounds: Nvidia shares rallied 3% as Wall Street analysts remain bullish despite recent sell-offs over concerns about a Chinese AI model.
* Rivian Opens Commercial Van Orders: Rivian opened up orders for its Rivian Commercial van beyond its initial launch partners, creating a potentially lucrative business for the EV maker.
* Energy Stocks Gain: Oil futures rallied, boosting energy stocks, despite tariff threats. The S&P 500 Energy Sector (XLE) was the biggest gainer, outperforming Tech (XLK) and Consumer Discretionary (XLY).
* Inflation Expectations Rise: Consumers' long-term inflation expectations edged higher in January as Trump teased more tariff announcements. Five-year inflation expectations ticked up to 3%, the highest since May 2024.
* Trump's Stagflationary Shock Warning: Economist Torsten Sløk warned that a full-scale trade war could deliver a "stagflationary shock" to the U.S. economy, characterized by slow growth and high inflation.
* Gold Surges: Gold prices climbed above $2,900 per ounce as investors sought safe-haven assets amid tariff uncertainties.
* GameStop Soars: GameStop stock surged after CEO Ryan Cohen posted a picture with Bitcoin advocate Michael Saylor, sparking speculation that GameStop may invest in Bitcoin.