Trump's Presidency Fuels Volatility in US Stock Market
On Tuesday, US stocks experienced a surge, with the Dow Jones Industrial Average (^DJI) surpassing 44,000 and the S&P 500 reaching the 6,000 threshold. Investors were reacting to President Donald Trump's initial policy initiatives, including proposed tariffs on Mexico and Canada.
The Dow led the upward trend, rising over 500 points (1.2%) after strong earnings from 3M Company (MMM). The benchmark S&P 500 (^GSPC) gained close to 0.9%, while the Nasdaq Composite (^IXIC) climbed around 0.6% despite fluctuations in Tesla (TSLA) and Apple (AAPL) performances. Nvidia (NVDA) shares advanced by more than 2% after a shaky start.
Wall Street remained volatile as the new president implemented executive orders and policies, with energy and trade issues taking center stage. This was the first trading day of Trump's second term, as US markets were closed on Monday for the Martin Luther King Jr. holiday.
Initially, markets were relieved when Trump refrained from implementing broad tariff hikes expected by many on his first day in office. However, he subsequently indicated that 25% duties could be imposed on Mexico and Canada starting Feb. 1.
The 10-year Treasury yield (^TNX) dropped around 4 basis points to approximately 4.57% on Tuesday, partially recovering from a steeper decline in Asian trading.
The next batch of quarterly earnings will provide further insights for investors. Netflix (NFLX) is anticipated to deliver robust results when it reports after the bell.
Netflix Shares Soar on Subscriber Growth
Netflix (NFLX) stock surged over 10% in after-hours trading on Tuesday after reporting a remarkable 18.9 million new subscribers in the fourth quarter. Revenue and earnings also surpassed expectations. The company announced a $15 billion stock buyback and raised its full-year revenue outlook. Strong subscriber gains were attributed to the conclusion of 2024 with two back-to-back NFL games, a successful "Jake Paul vs. Mike Tyson" boxing match, and the return of "Squid Game." Amidst these developments, Netflix announced price hikes for its service.
Dow Surges Above 44,000 as Trump Holds Off on Tariffs
In the wake of President Trump's inauguration, stocks gained on the first trading day. With a sigh of relief over the absence of a broad-based tariff policy announcement, the Dow Jones Industrial Average (^DJI) advanced by over 500 points (1.2%) to close above 44,000. The S&P 500 (^GSPC) rose by almost 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) climbed by around 0.7%.
The fortunes of the "Magnificent Seven" stocks varied on Monday. EV giant Tesla (TSLA) declined after Trump reversed a pro-EV policy implemented by his predecessor in an executive action late Monday. Apple (AAPL) shares also slipped due to Wall Street downgrades over concerns about weak iPhone sales. Meanwhile, AI chip leader Nvidia (NVDA) inched up by over 2% after a volatile start to the session.
Trump deferred the implementation of universal tariff hikes anticipated by many on day one of his presidency. However, the new president suggested that Mexico and Canada could face 25% tariffs starting Feb. 1.
Oil prices fell on prospects of a tariff war impacting growth and consumption. They also followed the signing of an executive order declaring a "national energy emergency" aimed at deregulating the industry and boosting domestic production.
Netflix Earnings to Report Strong Q4
Netflix (NFLX) is scheduled to report its fiscal fourth quarter earnings on Tuesday after market close. Analysts expect the streaming giant to deliver solid results after concluding the year with two back-to-back NFL games, a successful "Jake Paul vs. Mike Tyson" boxing match, and the return of "Squid Game." Netflix stock has stumbled since the year's beginning after finishing 2024 at record highs.
Analysts' Estimates Boosting Stock Performance
Beating analysts' estimates has been driving stock performance in this earnings season. Thus far, 43 companies in the S&P 500 have reported, led by many large banks, and results have exceeded expectations. Data from Bank of America Securities equity strategy team shows that the S&P 500 is currently pacing for 12.5% year-over-year earnings growth this quarter, which would be the strongest quarterly growth for the S&P 500 in more than three years.