US Stocks Rebound Amid Tariff Concerns
U.S. stocks rallied on Monday as investors looked past President Trump's latest tariff threats, including new levies on steel and aluminum imports. The Dow Jones Industrial Average (^DJI) gained nearly 0.4%, while the S&P 500 (^GSPC) rose roughly 0.6%. The Nasdaq Composite (^IXIC) surged nearly 1% as shares of AI chip giant Nvidia (NVDA) climbed 3%, along with other tech stocks.
Investors weighed Trump's recent pledge to introduce additional 25% tariffs on steel and aluminum from all countries, with the official announcement expected on Monday. The new metals tariffs are likely to benefit US steel companies, whose stocks jumped. Shares in Cleveland-Cliffs (CLF), Nucor (NUE), and US Steel (X) all rose. Aluminum producer Alcoa's (AA) stock also gained.
The move marks another escalation in Trump's fast-moving policy overhaul and in the odds of a trade war, after tariffs against US trade partners Canada and Mexico were paused last week. Meanwhile, markets this week expect Trump to announce reciprocal tariffs on all trading partners that could match the duties levied on US products by each country.
However, Monday's gains for US stocks suggest that investors are getting used to Trump's trade salvos. Some on Wall Street say many now see the announcements as a negotiation tactic only.
That said, markets are concerned that the growing list of tariff hikes could drive up inflation, likely to stall 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. The latest New York Fed survey released on Monday showed that consumers see long-term inflation expectations ticking higher to 3%—the highest reading since May 2024.
On the corporate front, 78 S&P 500 companies are set to report earnings this week. McDonald's (MCD) shares rose after same-store sales grew, beating expectations. Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB) are set to follow this week.