US Stocks Rebound as Investors Look Beyond Trump's Tariffs
U.S. equities surged on Monday as investors shrugged off President Trump's latest tariff threats, including new levies on steel and aluminum imports. The Dow Jones Industrial Average (^DJI) gained nearly 0.4% after posting its worst weekly performance in four weeks. The S&P 500 (^GSPC) rose 0.6%, while the Nasdaq Composite (^IXIC) jumped nearly 1% as shares of AI chipmaker Nvidia (NVDA) soared 3% along with other tech stocks.
Investors weighed Trump's announcement to impose additional 25% tariffs on steel and aluminum from all countries, with the official announcement expected on Monday. The move is seen as escalating the trade war, after tariffs against Canada and Mexico were suspended last week.
Despite the tariff concerns, Monday's gains suggest investors are becoming accustomed to Trump's trade salvos, with some on Wall Street viewing the announcements as negotiation tactics.
However, markets are monitoring the potential impact of the tariffs on inflation, which could slow interest rate cuts. The January Consumer Price Index reading due Wednesday will be closely watched, along with retail sales updates for the week.
Tech Stocks Outperform as Energy Sector Rebounds
Tech and energy stocks led the gains, with Nvidia jumping 3% ahead of its earnings report on February 26. Energy stocks also performed well as oil prices rebounded from a three-week decline, with the S&P 500 Energy Sector (XLE) outperforming tech (XLK) and consumer discretionary (XLY).
Long-Term Inflation Expectations Tick Higher
A survey by the New York Fed showed that consumers expect long-term inflation to rise to 3%, the highest since May 2024. This could lead to concerns about potential interest rate increases if the Fed fails to control inflation.
McDonald's, Monday.com Report Earnings
McDonald's (MCD) shares rose after same-store sales growth exceeded expectations. Monday.com (MNDY) also surged over 25% following strong fourth-quarter earnings.
Outlook for the Week
Investors are watching for:
* Inflation data from the New York Fed and the University of Michigan
* Earnings reports from McDonald's, Monday.com, Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB)
* Trump's announcement of retaliatory tariffs against trading partners