By Wall Street interpreted President Donald Trump’s initial comments and actions on international trade as less severe than expected, leading to a rise in the Dow Jones Industrial Average on Tuesday.
At the time of writing, the Dow Jones Industrial Average was up 0.6%, while the S&P 500 gained 0.4%. The Nasdaq Composite index was up 0.2% from the previous close.
Amazon and Alphabet both saw gains of over 1%, contributing to a rise in several major technology stocks.
However, the tech-heavy Nasdaq was negatively affected by Apple’s decline of more than 3%, following two downgrades from Wall Street.
“Stock indices rallied and the dollar sold off as Mr Trump had little to say on tariffs during the former, indicating that they were not a ‘Day One’ issue,” David Morrison, senior market analyst at Trade Nation, said.
But he later said he was considering 25% tariffs on imports from Canada and Mexico from the 1st February to counter the flow of illegal immigrants and fentanyl across US borders.
President Trump instructed federal agencies to investigate allegedly unfair foreign trade practices, but he did not authorize new tariffs on his first day back in office.
Investors interpreted this as a sign that he may be less inclined to impose tariffs than initially anticipated.
Beyond trade policy, Wall Street will be closely watching Trump’s actions on his pro-business campaign promises. Notably, his calls for deregulation boosted banking stocks after his November election victory.
Other elements of the “Trump trade,” such as small caps, oil stocks, and bitcoin, will likely be highly sensitive to his administration’s policies.
Apple (AAPL) shares slide
Apple shares experienced a decline of nearly 4% following downgrades from two investment firms, Jefferies and Loop Capital, ahead of the opening bell.
Jefferies downgraded Apple’s stock to “underperform,” expressing concerns that the company’s revenue might fall short of investor expectations.
Loop Capital also lowered its rating to “hold,” citing a significant decrease in iPhone demand in anticipation of the upcoming iPhone 17 release.
These downgrades have contributed to a decline in investor confidence and negatively impacted Apple’s stock price.
3M stock jumps
3M, the global conglomerate known for its diverse range of products, experienced a significant surge in its stock price.
This jump, nearly 5%, came in the wake of the company’s Q4 earnings report, which exceeded analysts’ expectations.
3M reported adjusted earnings per share (EPS) of $1.68, surpassing estimates, and revenue of $5.81 billion, also beating forecasts.
A key factor driving these strong results was robust holiday sales across several of 3M’s business segments.
The company saw particularly strong performance in its industrial adhesives, tapes, and electronics divisions, indicating healthy demand from both consumer and industrial markets. These positive results have boosted investor confidence in 3M’s prospects.
Small cap stocks rises
Investors, in anticipation of looser business conditions under President Trump, drove outsized gains in small-cap stocks on Tuesday.
The Russell 2000, an index focusing on small-cap stocks, experienced a surge of over 1% in late-morning trading.
This performance notably surpassed that of the broader S&P 500 index, which only saw a gain of 0.5% during the same period.
This discrepancy in growth highlights the relative strength of small-cap stocks compared to the overall market at that specific time.
Market participants anticipate that Trump’s deregulation policies will benefit small-cap companies, driving the Russell 2000 to outperform the three major indexes with a gain of over 3% in the new year.
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