US Stocks Mixed as Investors Weigh Tariff Softening and Earnings
US stocks exhibited muted movement on Friday, with investors parsing the latest earnings batch and evaluating President Donald Trump's recent hints regarding a potential softening of his stance on China tariffs.
* The Dow Jones Industrial Average (^DJI) declined 0.2%, while the S&P 500 (^GSPC) slipped slightly below the flat line after reaching its first record high of 2025 on Thursday.
* The Nasdaq Composite (^IXIC) posted a modest gain of 0.1%.
President Trump's call at the Davos Economic Forum for reductions in US interest rates, oil prices, and taxes spurred investor optimism, initially buoying stocks. Despite questions on Wall Street regarding his ability to execute these changes, the major gauges are poised to end the week with gains above 2%, demonstrating the significant influence of Trump's statements.
On Thursday, Trump indicated that he would prefer not to impose tariffs on China, a shift that alleviated some concerns about a potential trade war. Chinese stocks (000300.SS) responded positively to these remarks during a Fox interview.
Positive momentum this week was also driven by a strong start to earnings season. However, the upcoming reporting of results by major tech companies next week looms as a key test.
In other market news:
* Oil prices (CL=F, BZ=F) edged higher on Friday but remained on track for a weekly loss amid fluctuations influenced by Trump's comments. Investors considered not only the shift in China policy but also the president's demand that OPEC lower crude costs.
* Gold (GC=F) approached a record high as the dollar (DX-Y.NYB) weakened, making the precious metal more affordable.
* Preliminary data released on Friday indicated a seven-month high in US manufacturing and services activity in January. This expansionary reading bodes well for the economy ahead of the Federal Reserve's policy meeting next week.
Additional Updates:
* Trump Eases Tariff Talk, Weakening Dollar: President Trump's less aggressive stance on tariffs has weakened the US dollar, promoting other currencies in the process. Trump's remarks on Fox News Thursday night suggest a possible retreat from earlier threats, providing more room for avoiding a trade war with China.
* Existing Home Sales Surge to Highest Level Since February 2024: Sales of existing homes increased in December at the strongest pace in nearly a year, despite elevated mortgage rates and home prices. The National Association of Realtors reported a 2.2% rise to a seasonally adjusted annual rate of 4.24 million, marking the highest level since February 2024.
* Stocks Little Changed as Investors Weigh China Tariff Softening: Stocks are expected to end the week with another gain as investors consider Trump's hints at a softer stance on China tariffs. Despite lingering doubts about his execution abilities, these remarks have sparked investor optimism and boosted market sentiment.