Market Surges on Lack of Tariffs on Day 1 of Trump's Second Term
New York, January 20 - The U.S. stock market witnessed a significant rally on Tuesday, driven primarily by the absence of sweeping tariffs on major trading partners by President Donald Trump.
Key Highlights:
* The S&P 500 Index climbed by 1.2% before slightly fading.
* The Russell 2000 Index surged by 1.6%.
* Treasury yields fell, indicating a decreased expectation of interest rate hikes.
Trump's Role in the Market:
* Trump's promise to impose tariffs of up to 60% on Chinese goods and 30% on Mexican and Canadian products had created uncertainty in the markets.
* The unexpected absence of these tariffs boosted investor confidence and triggered a risk-on sentiment.
* Analysts expect Trump to continue playing an active role in market movements through executive orders and statements.
Sector-Specific Impacts:
* Tech shares received a boost after a White House official hinted at an AI spending announcement.
* Electric vehicle (EV) stocks declined after Trump ordered a review of EV subsidies and policies.
* Tesla Inc. saw its stock price drop by 4.7%, weighing on the S&P 500 Index.
* Space companies, including Intuitive Machines Inc. and Rocket Lab USA Inc., surged on Trump's promise to pursue space exploration.
International Implications:
* Canadian energy and industrial stocks experienced a modest decline due to Trump's tariff plans.
* The Nasdaq Golden Dragon China Index remained stable, with no announced tariffs on Chinese goods.
Cryptocurrency Outlook:
* Bitcoin and crypto-linked stocks rebounded after the U.S. Securities and Exchange Commission (SEC) announced a task force headed by Hester Peirce, known as "Crypto Mom."
* The task force aims to establish a regulatory framework for crypto assets.
Conclusion:
The absence of immediate tariffs on Day 1 of Trump's second term has provided a positive impetus to the stock market. However, investors remain cautious about the potential for future policy announcements and their impact on specific sectors.