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US stocks traded in the green on Tuesday as investors digested President Donald Trump’s first policy moves, with promised tariffs on Mexico and Canada front of mind.
The Dow Jones Industrial Average (^DJI) led stocks higher with the index up about 1% on the heels of solid earnings from 3M Company (MMM). Shares jumped over 5% after the company issued optimistic full-year guidance, making it the top performer within the Dow.
The benchmark S&P 500 (^GSPC) moved up roughly 0.7%, while the Nasdaq Composite (^IXIC) climbed about 0.4% despite wobbly midday performances from Tesla (TSLA) and Apple (AAPL). Nvidia (NVDA) shares inched up a modest 1%.
Wall Street is bracing for volatility as the new president storms ahead with executive orders and actions, with energy and trade center stage. It’s the first day of trading in Trump’s second term, as US markets were closed Monday for the Martin Luther King Jr. holiday.
Markets got a dose of relief as Trump held off from firing off the barrage of universal tariff hikes expected by many on his first day in office.
But the mood shifted after Trump said later in the day that he was looking at imposing 25% duties for Mexico and Canada starting Feb. 1. And Chinese stocks (000300.SS) closed out Tuesday with only slight gains, suggesting investors aren’t convinced that a US-China reset is coming to avert a trade war.
Meanwhile, the 10-year Treasury yield (^TNX) fell about 4 basis points to around 4.57% on Tuesday, recovering somewhat from a deeper drop in Asia trading.
The next batch of quarterly earnings will provide more food for thought for investors. Netflix (NFLX) is expected to deliver strong results when it reports after the bell.
Meanwhile, earnings at Charles Schwab (SCHW) soared nearly 50% as trading activity climbed by double digits. D.R. Horton (DHI) also beat expectations despite a soft housing market.
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Bitcoin retreats from record high but still up over $105K
Bitcoin (BTC-USD) has been on a ride, rising to a record high above $109,000 on Monday as Trump was sworn in and the new president issued an official TRUMP “meme coin” token.
But the crypto pulled back from its highs on Tuesday after a hoped-for pro-crypto push failed to appear in the first policy actions. After initially trading lower to start the trading day, bitcoin inched up over 4% to trade above $105,500 at last check.
Industry leaders still think crypto-related executive orders are on the horizon as Trump 2.0 officially kicks off. Still, tangible actions and clearer regulations will be needed to continue to boost the crypto industry over the longterm, according to analysts.
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Homebuilder DHI stock wavers amid weaker-than-expected home orders
DR Horton (DHI) stock wavered Tuesday morning after the builder reported weaker-than-expected home orders for its fiscal first quarter but affirmed its full-year guidance and delivery projections.
The Texas-based homebuilder posted earnings per share of $2.61, beating consensus expectations of $2.38. However, net sales orders dropped to 17,837, a 1.3% decrease year over year, and fell short of the expected 18,478.
Builders like DHI have been facing higher mortgage rates, leading to increased incentive levels. According to Freddie Mac, the average 30-year fixed interest rate rose to 7.04% last week as strong employment data pushed yields higher.
DHI said on its conference call that its use of incentives to sell homes may weigh on its gross margin in the second quarter.
“Sometimes we may offer a rate or an incentive beyond where we would hope to,” CEO Paul Romanowski said. “But at the end of the day, we’re going to be competitive in the market.”
Looking ahead, DHI expects revenue to be about $36 billion to $37.5 billion, higher than analysts estimates of $37.12 billion.
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Dollar falls as Trump avoids tariffs — for now
The US dollar (DX=F, DX-Y.NYB) has been volatile since Donald Trump’s inauguration, retreating from near two-year highs as the president failed to enact broad-based tariffs on his first day in office.
The move surprised investors as an emergency order would have allowed immediate tariff increases in contrast to the alternative process of investigations, which is likely to take longer to complete.
Still, the dollar regained about half of its losses after the president later said tariffs on Mexico and Canada could be imposed by Feb. 1. He also issued a memorandum directing federal agencies to evaluate US trade policy, which could eventually lead to blanket tariffs across a variety of trading partners.
Mohamed El-Erian, chief economic adviser at Allianz, told Yahoo Finance’s Morning Brief program that the dollar’s gains and losses signal a new normal for markets.
“The message is this is not a one-day event,” he said, noting both upside and downside risks exist. “This is something that’s going to remain with us.”
To that point, Morgan Stanley strategist Michael Zezas and economist Michael Gapen said in a note on Tuesday that Trump’s back-and-forth rhetoric “reminds us that vigilance is warranted as the US policy path could evolve quickly.” The team maintained its stance that any policy adjustments likely won’t be felt until the back half of the year.
The greenback’s recent price action has largely been driven by two main catalysts: Trump’s election and the subsequent Republican sweep, along with the recalibration of future Fed easing in the face of strong economic data.
After hitting a September low, the US Dollar Index (DX-Y.NYB), which measures the dollar’s value relative to a basket of six foreign currencies (the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc), has rallied nearly 10%. Since the election, it has climbed by about 5%.
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Tesla stock falls as Trump ends electric vehicle mandate
Yahoo Finance’s Laura Bratton reports:
Tesla (TSLA) stock sank more than 4% in early trading Tuesday, reversing premarket gains on the first trading day since the inauguration of Donald Trump as the president scrapped a pro-EV policy put into place by his predecessor.
On his first day in office, Trump wasted no time shedding the skin of the outgoing administration, revoking 78 executive orders made by former Democratic President Joe Biden during his tenure. One of those Biden-era policies that was revoked mandated that half of the new US cars manufactured be electric by 2030.
Other EV stocks fell on the news. Lucid (LCID) tumbled nearly 7% while Rivian (RIVN) slid 5%. Meanwhile, General Motors (GM) and Ford (F) stocks were up.
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Stocks rise at the open to usher in Trump 2.0
US stocks climbed across the board on Tuesday as investors digested President Donald Trump’s first wave of executive orders, with future tariffs on China and Mexico at the forefront of stock traders’ minds.
The Dow Jones Industrial Average (^DJI) and the benchmark S&P 500 (^GSPC) rose around 0.5% and 0.4%, respectively. The Nasdaq Composite (^IXIC) also climbed about 0.5% as Nvidia (NVDA) and other tech megacaps boosted the overall index.
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