Trump's Presidency Unveils Market Volatility
On Tuesday, US stocks soared with the Dow Jones Industrial Average (^DJI) surpassing 44,000 and the S&P 500 topping 6,000, as investors digested President Donald Trump's initial policy moves. Trump's promised tariffs on Mexico and Canada dominated market sentiment.
3M Company (MMM) boosted the Dow, with its shares gaining significantly as the index surged by over 500 points or 1.2%. The S&P 500 (^GSPC) gained nearly 0.9%, while the Nasdaq Composite (^IXIC) rose by approximately 0.6% despite Tesla (TSLA) and Apple (AAPL) underperforming. Nvidia (NVDA) shares edged up by more than 2% after a volatile trading session.
Trump's Actions Drive Market Uncertainty
Wall Street anticipated significant volatility as Trump swiftly signed executive orders and took actions, with energy and trade taking center stage. The first trading day of Trump's second term commenced after US markets were closed on Monday for the Martin Luther King Jr. holiday.
Markets experienced a sense of relief as Trump refrained from imposing universal tariff hikes widely expected on his first day. However, he indicated the possibility of implementing 25% tariffs on Mexico and Canada starting February 1st.
Earnings Season Delivers Mixed Results
Netflix (NFLX) is poised to release strong quarterly results later today. The company is expected to report a surge in subscriber growth, with revenue and earnings surpassing expectations.
On Monday, the "Magnificent Seven" tech stocks exhibited varying performances, with Tesla (TSLA) declining due to Trump's reversal of a pro-EV policy and Apple (AAPL) experiencing a downturn amid Wall Street's concern over weak iPhone sales. However, Nvidia (NVDA) gained over 2% despite an erratic start to the trading session.
Analysts Optimistic About Earnings Season
Analysts are optimistic about the ongoing earnings season, with Bank of America Securities Equity Strategy Team data indicating that companies exceeding analyst estimates for both sales and earnings per share have seen their stocks outperform the S&P 500 by 3.34% the following trading day.
Trump's Policies Shaping Market Dynamics
According to Callie Cox, chief markets strategist at Ritholtz Wealth Management, market fundamentals are taking a backseat to significant policy-related developments in the current environment.
Trump's hesitation to implement broad-based tariff hikes on the first day of his presidency contributed to a sharp decline in the US dollar index, subsequently leading to rallies in sectors likely to benefit from a weaker dollar, such as industrials and materials.
Bitcoin Gains Attention
Coinbase CEO Brian Armstrong believes President Trump could establish a strategic bitcoin reserve, mirroring the government's practice of holding reserves in gold and other assets. Bitcoin hovered around $106,000 on Tuesday afternoon.
Apple Faces Headwinds
Wall Street downgrades caused Apple (AAPL) shares to drop nearly 4% on Tuesday. Analysts predict lower-than-expected quarterly results due to lower iPhone sales and subdued consumer interest in AI.
Oracle and AI
Oracle (ORCL) shares surged as much as 6% on Tuesday amid reports that the company would participate in a $500 billion investment in AI infrastructure to be unveiled by President Trump.