US stocks surged on Monday as investors largely shrugged off President Trump’s latest tariff threats, which included the imposition of new levies on steel and aluminum imports. The rally was led by gains in the S&P 500 and Nasdaq, with Nvidia’s stock jumping alongside other tech shares.
The Dow Jones Industrial Average (^DJI) rose by nearly 0.4%, bouncing back from its worst performance in almost four weeks. The S&P 500 (^GSPC) gained around 0.6%, while the Nasdaq Composite (^IXIC) climbed nearly 1%, propelled by a 3% increase in Nvidia’s stock, which led a broader tech sector rally.
Investors were focused on Trump’s recent pledge to impose an additional 25% tariff on steel and aluminum imports from all countries, with an official announcement expected on Monday. This move is seen as part of a broader strategy to protect US industries, particularly steel manufacturers. Shares of US steel companies surged, with Cleveland-Cliffs (CLF), Nucor (NUE), and US Steel (X) all seeing significant gains. Aluminum producer Alcoa (AA) also benefited from the news.
The proposed tariffs mark an escalation in the ongoing trade dispute, coming after a temporary pause in tariffs on US trade partners Canada and Mexico last week. Markets are now anticipating reciprocal tariffs on US exports, potentially matching the duties imposed by other countries on American products.
Despite the uncertainties surrounding trade policy, Monday’s gains indicate that investors may be becoming more accustomed to Trump’s aggressive trade rhetoric. Some market analysts suggest that the tariff announcements are primarily seen as a negotiation tactic rather than a concrete policy shift.
However, concerns linger over the potential economic impact of rising tariffs, particularly in terms of inflation. Higher tariffs could lead to increased prices for consumers, which might delay interest rate cuts. The January Consumer Price Index, set for release on Wednesday, will be a key indicator for inflation trends, with retail sales data also being closely monitored.
Meanwhile, the latest survey from the New York Federal Reserve, published on Monday, showed that consumers’ long-term inflation expectations have risen to 3%, the highest level since May 2024.
In corporate news, 78 S&P 500 companies are scheduled to report earnings this week. McDonald’s (MCD) shares rose after reporting better-than-expected same-store sales growth. Other companies to watch this week include Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB).
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