U.S. Stocks Rebound as Investors Dismiss Trump's Tariff Threats

On Monday, U.S. stocks rebounded as investors shrugged off President Trump's latest tariff threats, including new levies on steel and aluminum imports.

Indices Rise:

* Dow Jones Industrial Average (^DJI) gained 0.2%.
* S&P 500 (^GSPC) rose approximately 0.6%.
* Nasdaq Composite (^IXIC) climbed roughly 1.1% as shares of chip giant Nvidia (NVDA) surged along with other tech stocks.

Market Movement:

Investors weighed Trump's recent pledge to impose additional 25% tariffs on steel and aluminum from all countries, with the official announcement expected on Monday. The new metals tariffs are likely to benefit U.S. steel companies, whose stocks jumped. Shares in Cleveland-Cliffs (CLF), Nucor (NUE), and U.S. Steel (X) all rose. Aluminum producer Alcoa's (AA) stock also gained.

Trade Concerns Linger:

Despite the gains, the move marks another escalation in Trump's trade policy overhaul and increases the odds of a trade war, after tariffs against U.S. trade partners Canada and Mexico were paused last week. Markets expect Trump to announce reciprocal tariffs on all trading partners that could match the duties levied on U.S. products by each country. However, Monday's gains suggest that investors are becoming accustomed to Trump's trade salvos, with some on Wall Street now seeing them as negotiation tactics.

Inflation Concerns:

Markets are concerned that the growing list of tariff hikes could drive up inflation, potentially stalling interest rate cuts. The January Consumer Price Index reading due on Wednesday will be closely watched for clues, along with this week's updates on retail sales. The latest New York Fed survey released on Monday showed consumers see long-term inflation expectations ticking higher to 3% — the highest reading since May 2024.

Corporate Earnings:

78 S&P 500 companies are set to report earnings this week. McDonald's (MCD) shares rose after same-store sales grew, beating expectations. Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB) are expected to follow this week.