US stocks rose on Tuesday as investors assessed Donald Trump’s first actions as US president and were encouraged that he did not implement blanket tariff increases. The Dow Jones Industrial Average gained 537.98 points, or 1.24%, to close near its highest level in over a month. The S&P 500 also rose, gaining 52.58 points, or 0.88%, to reach its highest level since January 6.
Brokerage Goldman Sachs lowered its forecast for the chances of universal tariffs this year to 25% from about 40% in December, citing relief that Trump did not announce concrete plans on tariffs and surcharges. Investors hope the new administration will use the threat of trade levies as a negotiating tactic and take a more nuanced approach.
However, with trade policies still unclear, investors remain cautious about tariffs and their potential impact on inflation. The Dow Jones Industrial Average’s 1.24% gain was driven by sectors such as industrials, which rose 2.03%, led by stocks like 3M, which rallied 4.2% after reporting upbeat fourth-quarter profits.
The biggest loser among the S&P 500’s major sectors was energy, down 0.64%. Meanwhile, shares of automakers rose, including Ford and General Motors, which saw rating upgrades from Deutsche Bank. In other news, Walgreens fell 9.2% after being accused by the Justice Department of filling unlawful prescriptions.
Despite the uncertainty surrounding trade policies, investors are optimistic about the new administration’s approach. The S&P 500 is up nearly 19% since the start of Trump’s first term and has shown resilience in the face of volatility. Economists expect the Federal Reserve to keep borrowing costs unchanged when it meets next week, with traders predicting the first interest rate cut coming in June.
Source: https://www.reuters.com/markets/us/futures-climb-investors-brace-president-trumps-trade-policy-plans-2025-01-21