US Stocks Bounce Back as Steelmakers Rally Amid Tariff Announcement
On Monday, US stocks experienced a positive open, suggesting a potential recovery from recent losses. This upswing coincides with the announcement by President Donald Trump of new tariffs on steel and aluminum imports.
The Dow Jones Industrial Average (^DJI) climbed 0.25%, while the S&P 500 (^GSPC) gained 0.70%. The Nasdaq Composite (^IXIC) surged 1.20%, primarily driven by a jump in Nvidia (NVDA) shares.
Investors are weighing Trump's plan to impose additional 25% tariffs on steel and aluminum imports from all countries. This move is expected to benefit US steel companies, as evidenced by the surge in their stock prices. Cleveland-Cliffs (CLF) surged over 14%, Nucor (NUE) rose nearly 7%, and US Steel (X) gained 3%. Aluminum producer Alcoa (AA) also experienced gains.
The tariff announcement marks a significant escalation in Trump's trade policy and increases the likelihood of a trade war. Major US suppliers Canada and Mexico, previously threatened with tariff hikes, face the potential for severe impact.
Despite concerns about a potential trade war, Monday's stock market gains suggest that investors are adjusting to Trump's trade salvos. Some market analysts believe that the announcements may be seen as a negotiation tactic rather than a drastic shift in policy.
However, investors remain wary of the potential for rising inflation due to the tariff hikes, which could halt interest rate cuts. The Consumer Price Index for January, scheduled for release on Wednesday, will be closely monitored for clues.
Meanwhile, 78 S&P 500 companies are scheduled to report earnings this week. McDonald's (MCD) shares rose after reporting better-than-expected same-store sales growth. Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB) are also set to release earnings this week.