Stock market rallies to close on relief Trump stops short of imposing reciprocal tariffs
U.S. stocks closed higher after President Donald Trump declined to enact reciprocal tariffs on Thursday. Instead, he asked federal agencies to study how they might implement the taxes.
Trump's stopping short of imposing a broad range of tariffs on a swath of countries was a relief to investors worried about effects of a potential trade war on the economy and inflation.
The broad S&P 500 index added 1.04%, or 63.10 points, to 6,115.07; the blue-chip Dow gained 0.77%, or 342.87 points, to 44,711.43 and the tech-heavy Nasdaq jumped 1.5%, or 295.69 points, to 19,945.65. The benchmark 10-year yield fell to 4.535%.
Tariff threats and inflation fears
Trump's tariff threats have kept the market on its toes, with economists warning broad, long-lasting tariffs would slow the economy and reignite inflation. Trump has already slapped a 25% tariff on steel and aluminum imports.
Investors are refocused on inflation after a pair of higher-than-expected inflation reports this week.
Overall wholesale inflation, or a measure of prices businesses pay for goods and services, rose more than expected in January, but the core rate without energy and food was in line with economists' average forecast, the government said this morning.
The producer price report comes off the heels of a higher-than-expected consumer inflation report on Wednesday. The higher-than-expected inflation reports coupled with potentially steeper prices from Trump's tariff plans have made economists further pare back expectations for Federal Reserve rate cuts this year. More economists are now expecting only one or none.
The "report was hot, but probably lifted by temporary factors and residual seasonality," said Bill Adams, chief economist at Comerica Bank. It "doesn’t tell the Fed much new. They are on hold near-term, and are likely though not assured to make a single rate cut in 2025 if prices with lots of momentum like housing and residential rents continue to cool and offset upward pressures on inflation from post-election changes to economic policy."
Corporate news
While investors come to grips with the idea that the Fed may be pausing rates for longer than originally expected due to renewed inflation concerns, company news continues to flow. Some of the day's movers include:
- Reddit shares fell 5.32% after the social media company's number of unique global daily active users, or those who visited the website at least once in a day, missed Wall Street estimates following Google altering its search algorithm.
- Shares of Arm Holdings rallied more than 6% after the the Financial Times said the semiconductor designer is planning to launch its own chip this year as early as this summer with Meta as a potential first customer.
- Hansebrand missed revenue estimates in the final few months of the year, and its chief executive will resign at the end of the year. Shares fell 18.5%.
- West Pharmaceutical Services said it expects full-year results to miss analysts' forecasts. Shares plunged 38.22%.
- Cisco's results topped quarterly estimates and the networking company issued a bullish outlook. Shares of the networking hardware company added 2.09%.
- Shares of defense companies like Lockheed Martin, Northrop Grumman, and General Dynamics fell after Trump said defense spending could be halved.
- Applovin signed a deal to sell its mobile-gaming division. Shares of the mobile-advertising tech company soared 24.02%.
- Robinhood shares jumped 14.11% after its earnings in the last three months of the year topped analysts' expectations, boosted by trading around last November's presidential election.
- MGM Resorts stock rose 17.46% after quarterly revenues topped analysts' forecasts.
- The Trade Desk missed fourth-quarter revenue estimates and issued weak guidance. Shares slid 33%.
- Equipment maker Deere missed earnings estimates and said it expects sales to keep dropping. Its shares tumbled more than 2%.
Bitcoin
Bitcoin prices fell despite a string of supportive news.
Trading platform Robinhood said its strong quarterly performance in the last three months of the year was due in part to $358 million in crypto-based revenues, which was 700% higher than the same period a year ago.
Fed Chair Jerome Powell also said in Congressional testimony on Wednesday the Fed doesn’t plan to get in the way of crypto banking and is now granting banks permission to serve cryptocurrency customers. This is a big deal because for years, crypto banks have been denied direct access to the Fed's payment system which basically means they couldn't be independent. Instead, they'd have to rely on bigger institutions to clear transactions or settle payments.
Digital currency exchange Coinbase is slated to report earnings later Thursday.
Bitcoin was last down 1.39% at $96,498.35.
The story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.