By Sinéad Carew and Johann M Cherian
(Reuters) – Wall Street’s major indexes closed higher on Tuesday, with the Dow and Dow Jones hitting their highest level in more than a month, as investors priced Donald Trump’s first moves as president American and breathed relief that he had not started his second term with total coverage. price increases.
Trump offered no concrete plans for universal tariffs and additional surcharges on his close trading partners as previously promised, but said he was considering imposing tariffs on Canadian and Mexican goods as early as February 1st.
As investors remain cautious about tariffs and the possibility of a global trade war leading to higher inflation, brokerage firm Goldman Sachs lowered its forecast for the chances of a universal tariff this year to 25 %, compared to around 40% in December.
“There was some relief and a little surprise that the rates were not announced in the first round of executive action that took place yesterday,” said Carol Schleif, chief market strategist at BMO Management. deprived of assets. “Markets are coming to the conclusion, probably correctly, that the administration will take a more nuanced approach.”
Investors are hoping the new administration will use the threat of tariffs as a negotiating tactic and use “a scalpel and not a hammer against tariffs,” Schleif said.
Last week, the S&P 500 and Dow Jones posted their biggest weekly percentage gains since early November, helped by strong bank profits and signs of a slowdown in underlying inflation.
Schleif also noted a healthy broadening of the market rally on Tuesday, with the more domestically focused small-cap index outperforming large-cap indexes and reaching its highest level since Dec. 18.
According to preliminary data, the S&P 500 gained 52.84 points, or 0.88%, to end at 6,049.50 points, while the Nasdaq Composite gained 126.58 points, or 0.64%, to 19,756. 78. The Dow Jones Industrial Average rose 540.68 points, or 1.24%, to 44,028.51.
Among S&P 500 sectors, the industrial sector was boosted by 3M, which rallied after reporting upbeat fourth-quarter earnings.
The utilities sector was supported by nuclear energy stocks after Trump issued a wave of orders intended to boost energy production. Its biggest winners were Vistra Corp, NRG Energy (NYSE:) and Constellation Energy (NASDAQ:).
Heavyweight Apple (NASDAQ:) was the biggest drag on the S&P 500 after brokerage Jefferies downgraded its rating to “underperform.”
Stocks of automakers, which are most sensitive to tariffs because of their vast supply chains, rose. Ford’s (NYSE:) gains lagged those of General Motors (NYSE:), whose rating was upgraded by German Bank (ETR:).
During the first year of the previous Trump administration, the S&P 500 rose 19.4%. The benchmark index rose nearly 68% during his four-year tenure but saw bouts of volatility, resulting in part from Trump’s trade war with China.
However, inflation remains above the Federal Reserve’s 2% target, fueling concerns that the new administration’s policies could delay the central bank’s pace of monetary policy easing.
Economists expect the Fed to leave borrowing costs unchanged at its meeting next week and traders expect the first interest rate cut to come in June, according to CME Group’s FedWatch tool (NASDAQ: ).
In other individual actions, Walgreens fell after the Justice Department accused it of filling illegal prescriptions for addictive painkillers and other drugs.
Modern (NASDAQ:) rallied after securing $590 million from the U.S. government to accelerate the development of its avian flu vaccine.
