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US stocks gained on Tuesday, with the Dow Jones Industrial Average (^DJI) rising back above 44,000 and the S&P 500 topping the 6,000 level as investors digested President Donald Trump’s first policy moves, with promised tariffs on Mexico and Canada front of mind.
The Dow led stocks higher, with the index rising more than 500 points, up over 1.2%, on the heels of solid earnings from 3M Company (MMM).
The benchmark S&P 500 (^GSPC) moved up nearly 0.9%, while the Nasdaq Composite (^IXIC) climbed about 0.6% despite wobbly performances from Tesla (TSLA) and Apple (AAPL). Nvidia (NVDA) shares inched up more than 2% after a shaky start to the session.
Wall Street braced for volatility as the new president storms ahead with executive orders and actions, with energy and trade center stage. Tuesday was 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 Trump then hinted late Monday that he was looking at imposing 25% duties for Mexico and Canada starting Feb. 1.
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.
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Netflix stock soars after subscriber growth blows away forecasts, company announces more price hikes
Yahoo Finance’s Alexandra Canal reports:
Netflix (NFLX) stock jumped over 10% in after-hours trading Tuesday after the streaming giant reported a whopping 18.9 million users in the fourth quarter while revenue and earnings also handedly beat expectations.
The company also announced a $15 billion stock buyback and boosted its full-year revenue outlook.
The strong subscriber gains come as streamer ended 2024 with two back-to-back NFL games, a successful “Jake Paul vs. Mike Tyson” boxing match, and the return of “Squid Game.” To that end, the company said price hikes will be hitting the service.
Read more here.
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Dow soars above 44,000 level, S&P 500 closes near record as Trump holds off on tariffs
Stocks gained on the first day of trading under Trump’s presidency amid a sigh of relief of no broad-based tariff policy announcement yet, though trading partners Mexico and Canada could be in focus in the coming days.
The Dow Jones Industrial Average (^DJI) gained more than 500 points, or more than 1.2% to close above the 44,000 level. The S&P 500 (^GSPC) rose almost 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) climbed about 0.7%.
Shares of the ‘Magnificent Seven’ stocks were mixed on Monday, with EV giant Tesla (TSLA) dropping after the President got rid of a pro-EV policy put into place by his predecessor in an executive action late Monday.
Apple (AAPL) shares also declined, weighed by Wall Street downgrades over concerns of weak iPhone sales. Meanwhile, AI chip giant Nvidia (NVDA) inched up more than 2% after a volatile start to the session.
Trump held off from implementing universal tariff hikes expected by many on day one of his presidency. However, the new president indicated Mexico and Canada could face 25% tariffs starting on Feb. 1.
Oil prices dropped on the prospects of a tariff war impacting growth and consumption and following the signing of an executive order declaring a “national energy emergency” aimed at deregulating the industry and boosting domestic production.
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Here come Netflix earnings…
Netflix (NFLX) is set to report its fiscal fourth quarter earnings on Tuesday after market close. Analysts expect the streamer to deliver strong results after it ended the year with two back-to-back NFL games, a successful “Jake Paul vs. Mike Tyson” boxing match, and the return of “Squid Game.”
Netflix stock has stumbled since the start of the year after finishing 2024 at record highs. The stock pullback comes as macroeconomic uncertainties have weighed broadly on megacap Big Tech.
Here’s what Wall Street expects for the fourth quarter, according to Bloomberg consensus estimates:
“There are very high expectations going into this quarter,” Geetha Ranganathan, senior analyst at Bloomberg Intelligence, told Yahoo Finance’s Morning Brief program. “But it’s really the perfect setup for Netflix.”
Ranganathan called out the company’s solid content slate, describing it as “one of their strongest quarters ever,” as live sports programming dominated the platform.
This will be the last earnings report in Netflix’s history revealing net subscriber figures. The company announced last spring it would stop reporting the metric at the start of this year.
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Beating analysts estimates is boosting stocks more than average this earnings season
The fundamental story for stocks has been humming along. Thus far 43 companies in the S&P 500 have reported, led by many large banks, and results have been better than expected. FactSet data shows the S&P 500 is now pacing for 12.5% year-over-year earnings growth this quarter which would mark the best quarter for S&P 500 earnings growth in more than three years.
Stocks have been rewarded more than normal too, according to data from Bank of America Securities equity strategy team. Companies who have beat analysts estimates on both sales and earnings per share have seen their stocks outperform the S&P 500 by 3.34% the following trading day, well above the historical average of 1.5%.
So, it’s been inarguably strong start to earnings for most of the S&P 500. But the question is whether or not fundamentals can remain the focus of the markets, as many equity strategists anticipate a solid earnings season to be overshadowed in the coming weeks as investors dissect Donald Trump’s return to the Oval Office and his first slew of policy implementations.
“Right now, earnings are almost the undercurrent of the stock market, and policy is taking center stage,” Ritholtz Wealth Management chief markets strategist Callie Cox told Yahoo Finance.
Cox pointed to Tuesday’s market action as a prime example of Trump’s policies serving as the key market driver at the moment. In the first full day of trading under the new Trump presidency, the US dollar index saw its worst one-day drop in a year, falling more than 1% after Trump didn’t take tariff action on his first day in office. Subsequently, stocks rallied. The Industrials (XLI) and Materials (XLB) sectors, which are considered global sectors that would benefit from a weaker greenback, were among the top performing sectors and rallied on the dollar weakness.
The sum of the market action shows that, for now, any clarity on how Trump will or won’t make good on his campaign promises is squarely in focus for markets. With about 90% of the S&P 500 still left to report, this could push what corporates say in reaction to the start of Trump’s policy rollout to the forefront.
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Trump should create a strategic bitcoin reserve: Coinbase CEO
Yahoo Finance’s Brian Sozzi reports:
A bitcoin (BTC-USD) strategic reserve under President Trump is a real possibility, says one of the industry’s biggest names.
“I think he is excited about it. I mean, he really wants to be the first bitcoin president,” Coinbase (COIN) CEO Brian Armstrong told Yahoo Finance at the World Economic Forum in Davos, Switzerland. Armstrong met with Trump before and after the election to advocate for the crypto industry.
Added Armstrong, “The US actually has reserves in lots of things, gold, oil, I think, like 27 different rare minerals, like palladium and all these things. And so I think the world is moving to a bitcoin standard for money. Any government who holds gold should also hold bitcoin as a reserve.”
Bitcoin hovered above $106,000 on Tuesday afternoon.
Read more here.
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Apple stock falls as Wall Street eyes weak iPhone sales, AI outlook
Apple (AAPL) stock fell nearly 4% Tuesday after a slew of Wall Street downgrades.
Yahoo Finance’s Dan Howley has the story:
Jefferies analyst Edison Lee downgraded the investment bank’s rating on Apple’s stock to Underperform and decreased his price target on Apple stock by 13% to $200.75 on Monday. Loop Capital also downgraded Apple’s stock from Buy to Hold, with a revised price target of $230, down from $275.
In an investor note, Lee said he expects Apple to report lower-than-expected results for its December quarter and a miss on expectations for the second quarter due to weak iPhone sales and a lack of interest in AI among consumers.
Shares of Apple fell as much as 3.7% midday on Tuesday. The stock is up 16% over the last 12 months. Big Tech rivals Meta (META) and Alphabet (GOOG, GOOGL) are up some 36% and 30%, respectively, over the last year, while Microsoft (MSFT) is up just 3.5%. The broader S&P 500 has climbed 20% in the same period.
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Oracle jumps on new Trump AI plan
Oracle (ORCL) stock jumped as much as 6% Tuesday after a report said the company is set to be part of a $500 billion investment in AI infrastructure that will be announced by President Trump on Tuesday.
CBS News reported Tuesday Trump will announce a new private sector investment to build artificial intelligence infrastructure in the US, with Oracle, ChatGPT creator OpenAI, and Japanese conglomerate SoftBank (9984.T) among those committing to the joint venture.
The joint venture, called Stargate, is expected to begin with a data center project in Texas, CBS reported, and company execs are expected to commit to an initial investment of $100 billion at an appearance at the White House Tuesday. Other companies are expected to join the venture and bring investment in the program up to $500 billion in the coming years.
SoftBank CEO Masayoshi Son, OpenAI chief Sam Altman, and Oracle CEO Larry Ellison are all expected to be in attendance at Tuesday’s event.
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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 long term, 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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Good morning. Here’s what’s happening today.
