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Stocks rose and bond yields fell Tuesday as traders watched for developments on trade policy.
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Investors were relieved by Donald Trump’s softer approach to tariffs on his first day in office.
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The president also promoted his pro-business and deregulatory agenda.
US stocks gained Tuesday after Donald Trump’s first-day policy actions dispelled the market’s fears of abrupt implementation of tariffs disrupting the bull rally.
Trump said he was considering 25% tariffs on Mexico and Canada to go into effect on February 1, but his executive order on the matter stopped short of actually levying any new duties on imports. The President instead issued a broad order directing the federal government to examine the impact of what he’s said are unfair business and currency practices.
The market widely viewed the order as a less drastic day-one move on the issue of foreign trade, which Trump campaigned heavily on leading up to the election.
The president ran on a promise to implement major duties on all US trade, threatening particulary high tariff rates on China, Mexico, and Canada. But since taking office on Monday, Trump’s initial moves suggest a softer-than-expected approach.
“Trump’s comments on China were notably less hawkish than during the presidential campaign or even his more recent comments since the election,” Goldman Sachs wrote on Tuesday. “And while we viewed a ‘universal tariff’ as a clear risk his comments suggest that, for now, it is a lower priority than we would have expected.”
Bond yields and the dollar fell on the news. The 10-year Treasury yield was two basis points to 4.584% Tuesday morning. The dollar index, which measures the US currency against a basket of rivals, was down about 0.9% to $108.39.
Stocks were further aided by signals that Trump’s presidency would be marked by a pro-business and deregulatory agenda, signaling to investors that the Trump trade is still alive. On his first day, the president declared a national energy emergency to promote US fossil fuel production and established a regulatory freeze.
Here’s where US indexes stood at the 9:30 a.m. opening bell on Monday:
Here’s what else is going on:
