See Mike Dolan’s upcoming days in the US and global markets
Old and new economy stocks are progressing with the high-tech and steel sectors advancing with a mix of tariff news and artificial intelligence topics, and the Treasury is on the way with the latest trip to Federal Reserve boss Jerome Powell to Congress Therefore, we are continuing to liven up Wall Street this week.
US President Donald Trump raised tariffs on steel and aluminum imports to flat 25% “without exceptions or exemptions.”
Steel imports account for 23% of America’s steel consumption in 2023, with Canada, Brazil and Mexico as the largest suppliers, according to data from the American Iron and Steel Institute.
Trump also said within two days he would comply with Monday’s actions with mutual tariffs in all countries considering duties on cars, semiconductors and drugs.
And in another way, he said he had spoken with Chinese President Xi Jinping since taking office on January 20th.
The tariff results were a lift to US steelmakers on Monday, with overseas rival stocks earning another marginal hit on Tuesday. For example, Germany’s Thyssenkrupp and Salzgitter each had a 1% drop.
Nucor, US Steel and Steel Dynamics and others rose 4% on Monday and Alcoa rose 2%, with US metals companies rising by 2% on Monday, with the benchmark S&P500 recovering early losses on Monday.
The currency market appears to be pushing iron tariffs aside, with the dollar only slightly higher. Gold climbed to another record high, but Spot Gold temporarily hit $2,942.70 per ounce before retreating.
Inventory futures returned some of the profits on these indexes before the bell on Tuesday. This is due to an increase in the Long-Term Treasury yield ahead of this week’s massive debt sales, as Powell prepares six-month Congressional testimony.
AI excitement
However, stocks were also supported by high-tech, high new legs on Monday. AI Chipmakers Nvidia and Broadcom rose almost 3%.
Some of the latest AI excitement comes from the news that a consortium led by Elon Musk has provided $97.4 billion to buy the nonprofit that controls Openai. Mask automotive giant Tesla lost 3% in the report.
The broader optimism of US stocks comes from the latest tally of the corporate revenue season.
Over 60% of S&P500 companies report fourth quarter updates, so the index’s annual gross profit growth is tracked by nearly 15%. It’s significantly higher than the 10% expected on January 1st. At almost 5%, annual revenue growth is also higher than penciled painted at the beginning of the year.
These types of profit improvements, still active economic growth, tough labor markets, and rising import duties all give the Fed a good reason to suspend credit easing campaigns.
Powell’s testimony later that day likely shows that only one rate cut this year is fully priced, not before September.
News of unexpected, large-scale pickups in US wage growth last month on Friday was one reason for the expectations of these tempered rates, but there was an offset on Monday as well. The New York Fed’s latest household survey found that inflation expectations remained at around 3% over the year.
The International Monetary Fund said Tuesday it was too early to assess the impact of Trump’s tariff plans.
However, crude prices have risen again, with another week of Treasury auctions and inflation data ahead, pushing 10-year yields back past 4.5%.
Some of that backup was related to a slightly strange Trump reference over the weekend, and to the possibility of fraudulent Treasury debt accounting. Another one was related to Musk’s “government efficiency” financial account investigation.
Elsewhere, stocks in mainland China and Hong Kong have returned to news of a rising tariff war – chilling out recent rally on China’s Deepshek AI development.
However, concerns were also the news that in January, car sales in China had dropped by 12% from a year ago. It was the first decline since September, the biggest drop in almost a year as carmakers supported both tariff and price wars amidst fierce competition around the world. Shares of Chinese automakers XPENG and Geely fell to 10%.
In Europe, stock indexes were stronger.
In company news, BP reported lowest quarterly profit in four years as the oil giant promised to reset its strategy after news investor Elliott managed built up the company’s stock.
On Monday, BP’s shares forced a change, up 7% in expectations that Elliott had acquired private shares.
Major developments that should offer more direction to the US market later on Tuesday:
*US January NFIB Small Business Survey
*Semi-annual monetary policy testimony from Jerome Powell, former Federal Reserve Chairperson of the Senate Bank, Housing and Urban Affairs Committee. Fed Committee Governor Michelle Bowman, New York President John Williams and Cleveland Fried Beth Hammack all speaks. Bank of England Governor Andrew Bailey speaks
* EU Commission President Ursula von der Leyen meets US Vice President JD Vance in Paris
*US corporate revenue: DuPont des Nemour, Super Microcomputer, Coca-Cola, Marriott, AIG, Asylante, S&P Global, EcoLove, Eversers Energy, Gilead, Edwards Life Sciences, Humana, Eversers, Masco, Well Tower, etc.
*The US Treasury sells 3-year memos of $58 billion
