U.S. Stocks Rebound on Reciprocal Tariffs, Inflation Concerns

U.S. stocks rallied higher on Thursday after President Donald Trump announced plans for reciprocal tariffs while delaying their implementation, giving investors time to absorb a fresh report indicating rising inflation.

The Dow Jones Industrial Average (^DJI) surged by over 350 points, or 0.7%, while the S&P 500 (^GSPC) jumped by over 1% and closed just shy of its record high at 6,115.06. The tech-heavy Nasdaq Composite (^IXIC) gained more than 1.5% as Nvidia (NVDA) and Tesla (TSLA) surged.

Despite Trump's tariff announcement, which called for "fair and reciprocal" tariffs on all U.S. trading partners, markets reacted positively to the news that implementation would not be immediate, providing wiggle room for potential negotiations.

Meanwhile, the January Producer Price Index (PPI) showed continued elevated wholesale inflation, following a similar report on consumer inflation earlier in the week.

Nevertheless, earnings season continued on a solid footing, with a majority of S&P 500 companies reporting better-than-expected results. Robinhood (HOOD) shares soared after a fourth-quarter profit beat, while Reddit's (RDDT) stock tumbled amid a miss in user growth.

Airbnb Earnings Boost; Meta Extends Rally

Airbnb (ABNB) reported impressive fourth-quarter results, surpassing analysts' estimates for revenue and earnings per share. Shares rose by more than 15%.

Meta (META) continued its strong performance, closing higher for the 19th consecutive session. The stock has gained over 24% so far this year.

Broader Market Participation, Tariff Influence on Interest Rates

While the 2025 stock market has not been dominated by a few tech giants, a broader range of companies have been outperforming the S&P 500 index. This reflects a shift towards a "stock picker's market."

Despite the tariff plans, analysts believe the Federal Reserve is unlikely to raise interest rates in the near term, as inflation driven by tariffs is expected to be temporary. However, wage pressure caused by labor shortages could potentially prompt rate hikes later in the year.

Trump's Reciprocal Tariffs, Reactions

President Trump's reciprocal tariff plan aims to impose tariffs on countries that levy tariffs on the United States. India is expected to engage in negotiations to mitigate the impact on its economy.

The announcement comes after Trump imposed duties on steel and aluminum earlier this week and on some Chinese goods last week.

Other Market Highlights

* Arm (ARM) jumped by 7% on reports that it will unveil a new AI chip with Meta as one of its initial customers.
* 30-year mortgage rates declined slightly to 6.87%, remaining within a narrow range.
* Oil prices dipped as market participants discounted peace efforts in Ukraine.
* Musk threatens to withdraw his bid for OpenAI if it halts its conversion to a for-profit enterprise.
* Goldman Sachs warns of high risk in U.S. stocks due to excessive market participation.
* Asian shares rose on optimism about peace talks between the U.S. and Russia and the hype surrounding artificial intelligence.