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Financial Markets 02/10 09:47
NEW YORK (AP) -- Wall Street is taking President Donald Trump's latest
threat on tariffs in stride, on the whole, and U.S. stocks are rising on Monday.
The S&P 500 was up 0.6% in morning trading, coming off a losing week that
was bookended by worries about how potential tariffs could push up inflation
and threaten the economy. The Dow Jones Industrial Average was up 137 points,
or 0.3%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 1.1%
higher as Nvidia and other Big Tech stocks led the way.
The bond market also remained relatively firm, with Treasury yields ticking
lower after Trump said over the weekend that he will impose 25% tariffs on all
steel and aluminum imports, as well as other import duties later in the week.
Fear around tariffs has been at the center of Wall Street's moves recently,
and experts say the market likely has more swings ahead. The price of gold,
which often rises when investors are feeling nervous, climbed again Monday to
top $2,930 per ounce and set another record. But Trump has shown he can be just
as quick to pull back on threats, like he did with 25% tariffs he had announced
on Canada and Mexico, suggesting they may be merely a negotiating chip rather
than a true long-term policy.
Trump, of course, has already gone ahead with 10% tariffs on China. Those
will likely affect Wall Street by cleaving winning industries from losing ones,
but they won't necessarily drag the entire market lower, according to Michael
Wilson and other strategists at Morgan Stanley. A big, market-wide impact would
be more likely "if we were to see sustained tariffs on a range of countries
including 25% tariffs on Mexico and Canada."
Stocks of U.S. steel and aluminum producers jumped Monday, banking on
expectations tariffs could help their profits, while the overall S&P 500 index
remained relatively calm.
Nucor rose 5.5%, Cleveland-Cliffs jumped 11.6% and Alcoa climbed 3.8%.
Some companies that use lots of such metals were mixed. General Motors fell
0.9%, Ford Motor lost 0.5% and Whirlpool rose 0.5%.
In the meantime, earnings reports from big U.S. companies are also helping
to drive trading.
McDonald's climbed 4.9% even though it reported profit and revenue for the
end of 2024 that was just shy of analysts' expectations. Investors focused
instead on better-than-expected strength for its restaurants outside the United
States, particularly in the Middle East, Japan and other markets with licensed
McDonald's locations.
Big Tech stocks were some of the strongest forces pushing the S&P 500
higher, including a 3.7% climb for Nvidia. It had come under pressure last
month after a Chinese upstart upended Wall Street's artificial-intelligence
boom by saying it had developed a large language model that could perform like
the world's best without having to use the most expensive, top-flight chips.
Despite the development by DeepSeek, big U.S. companies have said in recent
weeks that they're still planning to plow billions of dollars into their AI
endeavors. That's calmed worries that DeepSeek could have turned off a huge
spigot of spending for the industry, at least for now.
Such gains helped offset a 7.8% drop for Incyte after the biopharmaceutical
company reported weaker profit for the latest quarter than analysts expected.
In the bond market, the yield on the 10-year Treasury fell to 4.46% from
4.50% late Friday. The yield on the two-year Treasury, which more closely
tracks expectations for what the Federal Reserve will do with short-term
interest rates, fell by a similar amount. It eased to 4.25% from 4.29%.
The Fed cut its main interest rate sharply at the end of last year, but
traders have been sharply curtailing their expectations for more reductions in
2025, in part because of fears that higher inflation from tariffs could tie its
hands. While lower rates can give a boost to the economy and investment prices,
they can also goose inflation higher.
Fed Chair Jerome Powell will be offering testimony before Congress later
this week, where he could offer more hints about what the Fed is thinking. In
December, it sent financial markets sharply lower after indicating it may cut
rates only twice this year. Now, some traders and economists think it may not
cut at all.
Reports are also coming this week on inflation, which could further drive
the Fed's actions. On Wednesday, economists expect a report to show prices for
eggs, gasoline and other living costs for U.S. consumers were overall 2.9%
higher in January than a year earlier.
In stock markets abroad, indexes rose across much of Europe and Asia.
Tokyo's Nikkei 225 was virtually unchanged after Japan's government reported
a record current account surplus last year.
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AP Business Writer Yuri Kageyama contributed.
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