Monday’s stock market witnessed a notable rebound, with technology and energy sectors leading the charge as investors prepared for potential new tariffs on steel and aluminum imports by President Trump.
The Dow Jones Industrial Average rallied by nearly 0.4%, while the S&P 500 saw a rise of approximately 0.6%. The Nasdaq Composite surged nearly 1%, driven by gains in semiconductor stocks, notably Nvidia, which climbed by 3%. Investors seemed to have largely dismissed President Trump’s threat of imposing an additional 25% tariff on imported steel and aluminum from all countries. This announcement, expected to be formalized on Monday, is anticipated to benefit US steel companies, as evidenced by the rise in stocks like Cleveland-Cliffs, Nucor, and US Steel. In the aluminum sector, Alcoa’s shares also advanced.
This development marks an escalation in Trump’s policy actions and raises the prospect of a trade war, particularly after suspensions of tariffs against US neighbors Canada and Mexico. Market expectations this week include reciprocal tariffs on US trading partners, potentially equalizing duties faced by US products abroad. However, Monday’s market performance suggests investors are becoming more accustomed to Trump’s trade maneuvers, viewing these announcements more as negotiation tactics rather than immediate threats.
Despite concerns that such tariffs could fuel inflation and hinder potential interest rate cuts, the stock market appears resilient. Attention will turn to the upcoming Consumer Price Index and retail sales data, crucial indicators for gauging inflation trends.
Nvidia’s stock gained momentum amid a positive reception from Wall Street analysts despite the creation of a Chinese AI model seen as a competitive threat. The company remained a favored pick for 2025, underscored by bullish analyst ratings and prospects in areas like gaming and automotive.
The energy sector outperformed as oil prices rebounded, with West Texas Intermediate and Brent futures climbing after a three-week decline. This recovery in oil prices contributed to the uplift in energy stocks.
In corporate earnings, McDonald’s broke expectations with strong same-store sales, while companies like Coca-Cola, Super Micro Computer, and Airbnb are anticipated to report later in the week. Additionally, the tech sector saw mixed performances, with some established names under pressure amidst AI spending concerns.
The New York Federal Reserve’s latest survey highlighted rising inflation expectations, with the outlook for commodities like gas and food also increasing. However, in other economic indicators, uncertainty remains, particularly in the job market as the probability of job loss seemed to rise slightly.
Interest in defensive assets like gold increased, with the precious metal reaching new highs amid ongoing tariff fears. Analysts continue to see gold as a valuable hedge against market volatility and inflation.
On a broader scale, President Trump’s aggressive trade agenda remains at the forefront, with significant moves anticipated on multiple fronts. As the week progresses, market participants will be watching the evolving trade discussions closely.
Investors appear to be adapting to the constant flux in trade policies, reflected in Monday’s market performance. Despite looming tariff threats, the focus remains on potential inflationary impacts and economic data, while certain stocks continue to shine amid the volatility.
