The Dow Jones Industrial Average surged on Tuesday as investors reacted positively to President Donald Trump’s comments and initial actions on trade policy, which appeared softer than anticipated. Wall Street’s cautious optimism followed Trump’s inauguration as the 47th president of the United States, marked by an indoor ceremony at the US Capitol on January 20, 2025. The Dow climbed 244 points, or 0.6%, bolstered by gains across various sectors.
The S&P 500 advanced 0.4%, while the Nasdaq Composite remained relatively flat, reflecting mixed performance in technology stocks. The Russell 2000 index, representing small-cap companies, rose nearly 1%. Leading the market’s upward trajectory, 3M saw its stock jump over 4% after reporting earnings that exceeded analyst expectations. Gains were also recorded among major technology firms, with Amazon and Alphabet each adding over 1%.
However, Apple faced a setback, dropping more than 3% after receiving two Wall Street downgrades, which weighed on the tech-heavy Nasdaq. President Trump’s trade policy statements during his first day in office were closely scrutinized. While he indicated the possibility of imposing 25% tariffs on Mexico and Canada by February 1 due to border policies, he refrained from immediate action. Additionally, Trump alluded to potential tariffs on China should negotiations over a TikTok-related deal fail.
Investors perceived his reluctance to implement sweeping tariffs immediately as a sign of moderation. In a memorandum issued on Monday night, Trump directed federal agencies to evaluate what he termed unfair trade practices by foreign countries. This move, while assertive, stopped short of implementing new tariffs, easing initial fears of aggressive trade policies. Alex Phillips, Chief U.S. Political Economist at Goldman Sachs, noted that Trump’s stance was “more benign than expected,” suggesting a lower likelihood of universal tariffs in the near term.
Despite this moderation, Phillips highlighted Trump’s comparatively hawkish tone toward Canada and Mexico. However, the reduced risk of broad-based import tariffs offered relief to investors wary of inflationary pressures stemming from trade conflicts. Trump himself stated he was not ready to impose universal tariffs, maintaining ambiguity regarding specific actions on China. Beyond trade, markets are keeping a close watch on the administration’s economic agenda, particularly Trump’s campaign promises of deregulation, which have historically buoyed banking and energy stocks.
His declaration of a national energy emergency to boost fossil fuel production has already signaled a shift toward pro-business policies. In his inaugural address, Trump described his return to the White House as heralding a new era of economic growth while sharply criticizing the Biden administration’s policies. Market analysts anticipate heightened sensitivity in sectors such as small-cap equities, oil, and cryptocurrency as Trump’s administration implements its policy framework. – By MENA Newswire News Desk.