US stocks surged higher on Tuesday during the initial full day of Donald Trump’s second term as President. Investors reacted positively to a series of executive orders signaling a more moderate approach to trade policies. The Dow climbed over 420 points, representing a 1% increase, in early afternoon trading. The S&P 500 and Nasdaq Composite also experienced gains of 0.76% and 0.56%, respectively.
During an Oval Office signing ceremony on Monday, Trump announced a 25% tariff on Mexico and Canada effective February 1, without mentioning any tariffs on China, a key trading partner. In response to questions about China tariffs, Trump referenced existing tariffs from his previous term, which were not removed by his successor, President Joe Biden. Additionally, Trump hinted at the potential for tariffs on China if no agreement was reached regarding the popular app TikTok, which was facing regulatory scrutiny in the US.
Market experts expressed confidence in the market’s reaction to the news, with Jamie Cox from Harris Financial Group stating that the market seemed to have moved past concerns about tariffs. Analysts at Morgan Stanley cautioned about the need for vigilance given the uncertainty surrounding Trump’s policy decisions.
UBS Global Wealth Management’s Chief Investment Officer for the Americas, Solita Marcelli, noted that despite tariff risks and policy concerns, she anticipated economic growth. Marcelli believed that factors like solid earnings growth and lower borrowing costs could drive stock prices higher throughout 2025, with a target of 6,600 for the S&P 500 by year-end.
The dollar dipped slightly following the tariff announcement, while WTI crude oil prices fell after Trump’s orders aimed at boosting domestic oil production. The 10-year Treasury note yield decreased, which was favorable for equities. The Russell 2000 index, tracking smaller companies, saw a 1.5% increase during morning trading.
Overall, the market remained optimistic about the prospects under Trump’s second term, building on the positive momentum from his election. Investors were hopeful that the anticipated business-friendly policies would continue to support stock market gains.
Stocks have largely maintained their position, with expectations of volatility looming as investors brace for the impact of President Trump’s policy decisions, according to financial analyst Geranen. January is seen as a pivotal month for gaining insight into the market’s trajectory for the year ahead.
Geranen emphasized the significance of January’s performance historically correlating with the market’s overall trend for the year. “The next 10 days will be crucial in setting the tone for the markets,” he remarked.
Market sentiment on Tuesday was driven by fear, as indicated by CNN’s Fear and Greed Index. However, there has been a noted improvement in sentiment since January 15 following the release of inflation data that was milder than anticipated. The VIX, Wall Street’s fear gauge, experienced a nearly 5% decline midday on Tuesday.
Charles Schwab (SCHW) witnessed a surge in its stock value early in the day, climbing by 3% after the brokerage firm reported earnings that surpassed expectations. In the fourth quarter of 2024, Charles Schwab raked in $5.3 billion in revenue, marking a 20% increase from the same period the previous year.
On the other hand, Apple (AAPL) saw a dip of over 4% following an analyst downgrade. Meanwhile, all eyes were on Netflix (NFLX) as the company was scheduled to report its fourth-quarter earnings later in the day.
The cryptocurrency market remained in focus, with Bitcoin maintaining a price point around $105,000 after reaching a record high above $109,000 on Monday. Notably, President Trump made no mention of cryptocurrency in his inaugural address and did not issue any executive actions related to the digital asset. Over the weekend, both Trump and First Lady Melania Trump released their respective meme coins.
In observance of Martin Luther King Jr. Day, Wall Street was closed on Monday. The evolving nature of these developments underscores the need to stay informed and updated on the latest news.
Contributions to this report were made by CNN’s Kayla Tausche, Kevin Liptak, and David Goldman. Stay informed with more CNN news and newsletters by visiting CNN.com and creating an account.
As the new year unfolds, the financial landscape is set for dynamic shifts as market players navigate through a myriad of factors influencing investment decisions. Stay tuned for further updates on this developing story.
