Wall Street Stays Steady Despite Trump’s Latest Tariff Threats/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street remained resilient on Monday, with major indexes edging higher despite President Donald Trump’s latest tariff threats. The S&P 500 gained 0.4%, while the Dow Jones Industrial Average and Nasdaq also saw modest increases. Trump’s weekend announcement of 25% tariffs on steel and aluminum imports sparked market concerns, but investors appear to be treating the move as a potential negotiation tactic rather than a long-term policy shift. Meanwhile, corporate earnings reports and upcoming Federal Reserve updates continue to shape market sentiment.
Wall Street’s Reaction to Trump Tariffs: Quick Looks
- The S&P 500 gained 0.4%, rebounding from a losing week driven by tariff fears.
- The Dow Jones Industrial Average rose 160 points, while the Nasdaq climbed 0.8%.
- Trump announced 25% tariffs on steel and aluminum imports, plus additional trade duties expected later this week.
- Steel stocks surged—Nucor jumped 5.7%, Cleveland-Cliffs soared 14.2%, and Alcoa gained 2.8%.
- Auto stocks fell, with General Motors down 0.8% and Ford losing 0.7%.
- McDonald’s shares rose 4.8%, despite missing earnings expectations, thanks to strong international sales.
- Bond yields slipped, with the 10-year Treasury yield falling to 4.46% as investors weigh inflation risks.
- The Federal Reserve’s stance on interest rates and an upcoming inflation report could impact future market movements.
Wall Street Stays Steady Despite Trump’s Latest Tariff Threats
Wall Street Navigates Trump’s Tariff Threats: A Deep Look
Markets Show Resilience Despite Trade Policy Uncertainty
Wall Street opened the week on a positive note, with major stock indexes posting modest gains despite heightened concerns over President Donald Trump’s latest tariff threats. The S&P 500 rose 0.4%, while the Dow Jones Industrial Average gained 160 points (0.4%), and the Nasdaq composite climbed 0.8%.
Trump’s latest trade move—announcing 25% tariffs on steel and aluminum imports—comes as part of a broader push to impose additional duties on imports. While tariffs have historically triggered market volatility, Monday’s trading suggested that investors are not panicking, instead interpreting the announcement as part of Trump’s negotiating strategy rather than a definitive policy shift.
Winners and Losers: Steel Soars, Auto Stocks Slip
Unsurprisingly, U.S. steel and aluminum producers surged in early trading, with investors betting on domestic gains from higher import costs:
- Cleveland-Cliffs skyrocketed 14.2%
- Nucor jumped 5.7%
- Alcoa climbed 2.8%
Conversely, companies that rely heavily on steel imports were mixed:
- General Motors dropped 0.8%
- Ford lost 0.7%
- Whirlpool edged up 0.2%
Tariff Concerns Loom, but Investors Remain Cautiously Optimistic
Trump’s history of reversing or softening tariff decisions may be tempering market concerns. He recently backed off a similar 25% tariff proposal on imports from Canada and Mexico, using it as leverage in trade negotiations instead. Some analysts believe his latest move could follow a similar pattern.
Michael Wilson, a strategist at Morgan Stanley, suggested that the broader market is unlikely to be significantly affected unless Trump expands tariffs beyond China, Canada, and Mexico. “A market-wide impact would be more likely if we were to see sustained tariffs on a range of countries,” he said.
Bond Market and Federal Reserve in Focus
The bond market remained relatively stable, with the 10-year Treasury yield falling slightly to 4.46% from 4.50% on Friday. The two-year Treasury yield dipped to 4.25% from 4.29%, reflecting investor caution about how tariffs might impact inflation and the Federal Reserve’s interest rate plans.
While the Fed cut its benchmark interest rate at the end of 2024, expectations for further rate cuts in 2025 have diminished due to concerns that tariffs could push inflation higher. Lower interest rates typically boost stock prices, but higher inflation could tie the Fed’s hands and limit future cuts.
Fed Chair Jerome Powell is set to testify before Congress this week, potentially offering more clarity on the central bank’s outlook. In December, Powell hinted at just two potential rate cuts in 2025, down from initial market expectations of more aggressive easing. Some economists now believe the Fed may not cut rates at all this year.
Key Earnings Reports Driving Market Sentiment
Corporate earnings also played a role in shaping Monday’s market movements.
- McDonald’s surged 4.8%, despite reporting slightly weaker-than-expected revenue and profit for Q4 2024. Investors focused on strong sales in international markets, particularly in Japan, the Middle East, and licensed global locations.
Upcoming Inflation Report Could Shape Market Outlook
Later this week, a key U.S. inflation report is set to provide further insight into consumer price trends. Economists expect the report to show that consumer prices—including goods such as eggs and gasoline—rose 2.9% year-over-year in January. If inflation remains higher than expected, it could reinforce concerns that tariffs will further drive up costs.
Global Market Performance
Markets in Europe and Asia saw modest gains on Monday, suggesting global investors are not yet overly concerned about Trump’s latest trade policies.
- Japan’s Nikkei 225 was nearly unchanged, after the government reported a record current account surplus for 2024.
- European indexes edged higher, mirroring Wall Street’s cautious optimism.
What’s Next for Markets?
While Trump’s tariffs remain a wildcard, Wall Street appears to be taking a measured approach, with investors focusing more on earnings reports and Federal Reserve signals. If inflation data remains controlled and the Fed provides a dovish outlook, markets could continue to climb. However, if Trump expands tariffs beyond steel and aluminum, investors may start pricing in higher economic risks.
The next few days will be pivotal as Powell’s testimony and inflation data offer clearer signals on how tariffs and interest rates could shape the market in the months ahead.
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