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CNN
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U.S. stocks closed higher Tuesday after the first full day of Donald Trump’s second presidency, as traders absorbed a storm of executive orders that so far suggest less aggressive action on trade.
The Dow Jones rose by around 1.2%, or 538 points. The S&P 500 gained 0.9% and the tech-heavy Nasdaq Composite rose 0.6%.
President Trump said Monday during a signing ceremony in the Oval Office that his administration would impose 25 percent tariffs on Mexico and Canada starting February 1. He did not mention tariffs on China, one of the United States’ largest trading partners.
Asked Monday during an Oval Office signing ceremony about tariffs on China, Trump noted that the significant tariffs he imposed during his first administration were still in place after former President Joe Biden largely left them in place.
Trump also hinted that the United States would slap tariffs on China if Beijing does not approve any deal on TikTok, which faces a ban in the United States over national security concerns and scuttling the first amendment.
“President Trump’s Inauguration Day policy announcements on tariffs were more benign than expected,” Alec Phillips, chief U.S. policy economist at Goldman Sachs, said Tuesday.
The market “appears to have overcome its pricing crisis,” Jamie Cox, managing partner at Harris Financial Group, said in an email.
Morgan Stanley analysts said in a note released Tuesday that Trump’s focus on tariffs as early as Feb. 1 serves as a reminder that “vigilance is warranted” as markets try to ride the wave of Trump’s policy decisions .
Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a note Tuesday that her outlook for the economy was “growth despite tariffs.”
“Tariff risks, U.S. fiscal policy concerns, and changing expectations for inflation and Fed policy are likely to keep stock markets volatile in the near term. But we think it’s very likely that a combination of resilient U.S. economic activity, solid earnings growth, lower borrowing costs and the potential for increased capital markets activity will drive stocks higher over the remainder of 2025,” Marcelli said.
Marcelli expects the S&P 500 to reach 6,600 by December.
The dollar, which has appreciated in recent months in anticipation of Trump’s second term, fell slightly on Tuesday after rising following the announcement of Trump’s proposed tariffs.
WTI crude oil, the US benchmark, was down 1.7% on Tuesday after Trump announced executive orders to roll back regulations and allow oil drilling in the United States.
The yield on 10-year Treasury notes fell, boding well for stocks.
The Russell 2000 index, which tracks smaller companies, gained 1.85%.
Investors also rallied behind the news that OpenAI CEO Sam Altman is expected to appear at the White House on Tuesday afternoon to meet with President Donald Trump and other tech CEOs to announce a huge private sector investment in artificial intelligence infrastructure in the United States. Oracle ( ORCL ) jumped about 7% following the announcement that it plans to partner with OpenAI and Softbank for the investment.
From Trump’s election in November through Inauguration Day, the S&P 500 gained nearly 4%, according to Sam Stovall, chief investment strategist at CFRA Research. This is the 11th best performance since 1944 during the “post-election honeymoon period,” he wrote in a note.
Positive performance during this period was a signal of progress both during the first 100 days of the presidency and throughout the year, almost 80% of the time, according to Stovall.
Investors will be eager to see if the good times can continue under the Trump administration.
Markets have already adjusted to expectations of a business-friendly Trump administration, Clark Geranen, chief market strategist at CalBay Investments, said in an email.
“Although Tuesday is the first trading session under Trump 2.0, markets are looking to the future, and much of the optimism about the potential for tax cuts and deregulation is already priced in, via the post-election stock market surge, which stocks held on to for a long time. most of them,” Geranen said.
Geranen said he expects volatility in the market as investors react to news of Trump’s policy decisions, although January will be crucial in getting a sense of what the year might look like for markets.
“January performance tends to predict, at least historically, market performance for the year as a whole,” Geranen said. “The next 10 days will be important for the markets.”
Easing fears was the sentiment driving the market Tuesday, according to CNN’s Fear and Greed Index, and has improved since Jan. 15, when inflation data was colder than expected .
The VIX, Wall Street’s gauge of fear, fell 6%.
Charles Schwab (SCHW) stock jumped early Tuesday and was up nearly 6% after the brokerage giant reported better-than-expected earnings. Charles Schwab reported revenue of $5.3 billion in the fourth quarter of 2024, up 20% from the same period a year earlier.
Apple (AAPL) stock fell more than 3% after being downgraded by analysts.
Netflix (NFLX) is scheduled to report its fourth-quarter results Tuesday after the bell.
Bitcoin was trading around $106,000 on Tuesday afternoon after hitting an all-time high above $109,000 on Monday. Mark Uyeda, acting chairman of the Securities and Exchanges Commission, announced on Tuesday the formation of an SEC “cryptocurrency task force” focused on examining the regulation of cryptocurrencies.
Trump did not mention bitcoin during his inaugural address and did not issue any crypto-related executive actions on Monday. Trump and his wife, First Lady Melania Trump, each posted their own meme pieces over the weekend.
Wall Street was closed Monday for Martin Luther King Jr. Day.
This is a developing story and will be updated.
