US Stocks Rebound as Investors Look Past Trump's Tariff Threats
US stocks surged on Monday, shrugging off President Trump's latest tariff threats, including new levies on steel and aluminum imports. The Dow Jones Industrial Average (^DJI) gained 0.4%, while the S&P 500 (^GSPC) rose 0.6%. The tech-heavy Nasdaq Composite (^IXIC) jumped 1% as shares of AI chip giant Nvidia (NVDA) soared 3% alongside other technology stocks.
Investors weighed Trump's announcement of additional 25% tariffs on steel and aluminum from all countries, with an official announcement expected Monday. The new tariffs are likely to benefit US steel companies, whose stocks surged. Shares of Cleveland-Cliffs (CLF), Nucor (NUE), and US Steel (X) all jumped. Aluminum producer Alcoa's (AA) stock also gained.
The move marks another escalation in Trump's trade policy and increases the risk of a trade war, after tariffs against US trading partners Canada and Mexico were paused last week. Markets expect Trump to announce reciprocal tariffs this week to match duties levied on US products by each country. However, the gains for US stocks on Monday suggest that investors are becoming accustomed to Trump's trade salvos. Some analysts believe that many now view the announcements as a negotiation tactic only.
Despite the trade concerns, markets are also focused on the potential impact of the growing list of tariff hikes on inflation, which could potentially stall interest rate cuts. The January Consumer Price Index reading, due Wednesday, will be closely watched for clues, alongside this week's retail sales updates. The latest New York Fed survey released Monday showed that consumers expect long-term inflation to rise 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 exceeded expectations. Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB) are also scheduled to report this week.