US Stocks Surge on Reciprocal Tariffs Delay
US stocks rallied on Thursday after President Donald Trump announced plans to impose reciprocal tariffs but delayed their implementation. Investors also digested a report indicating continued elevated wholesale inflation.
The Dow Jones Industrial Average (^DJI) surged over 0.7%, while the S&P 500 (^GSPC) gained over 1% to close just shy of its record high. The tech-heavy Nasdaq Composite (^IXIC) jumped over 1.5% led by gains in Nvidia (NVDA) and Tesla (TSLA).
Markets shrugged off Trump's tariff announcement, which called for "fair and reciprocal" tariffs on all US trading partners. However, the measures fell short of immediate implementation, allowing for potential negotiations.
Meanwhile, January's Producer Price Index (PPI) showed persistent wholesale inflation, underscoring challenges for the Federal Reserve in bringing inflation down to its target.
Earnings season continues to deliver solid results, with a majority of S&P 500 companies beating estimates. Robinhood (HOOD) shares surged after reporting a profit beat.
Despite the inflationary pressures, investors remain optimistic, as broader market participation has improved. The market is shifting away from the "Magnificent Seven" tech stocks, with a wider range of companies outperforming the index.
Wall Street is considering the possibility of a rate hike from the Federal Reserve later in 2025, although analysts believe it may not be triggered by tariffs. Instead, concerns over wage pressures and mass deportations could prompt policy action.
President Trump signed his plan for reciprocal tariffs on both allies and adversaries but delayed their implementation for negotiations. India's Prime Minister Narendra Modi is scheduled to visit the White House for discussions on the tariff impact.
Arm stock surged on reports that it will launch its own AI chip with Meta as a customer.
30-year mortgage rates inched lower to 6.87%.
While inflation remains elevated, economists found encouraging signs in the PPI data, suggesting a potential slowdown in price increases. The 10-year Treasury yield declined after the PPI release.
Nvidia and Tesla led the tech sector higher, with shares of Meta making modest gains.
Oil prices retreated as the market discounted peace efforts in Ukraine and assessed the potential impact of retaliatory US tariffs.
Elon Musk has threatened to withdraw his $97.4 billion bid for OpenAI's non-profit venture if its board halts the company's conversion to a for-profit entity.
Stocks shook off the expected tariffs and inflation data, reflecting investors' optimism.