Market Recap: Stocks Rally Despite Tariff Concerns, Fed Watch Begins
Major Indexes Rebound as Tech and Energy Sectors Lead Gains
On Monday, February 10, 2025, U.S. stock markets bounced back from last week’s losses, shrugging off concerns about new tariffs and focusing on upcoming economic events. The S&P 500 (^GSPC) closed up 0.64% at 6,064.57, while the Dow Jones Industrial Average (^DJI) gained 0.30% to end at 44,436.87. The Nasdaq Composite (^IXIC) outperformed, rising 1.09% to 19,736.82, driven by a strong showing in the technology sector.
Tariff Announcement Sparks Mixed Reactions
President Donald Trump’s announcement of new 25% tariffs on all steel and aluminum imports into the United States sent shockwaves through the market. Despite initial concerns, the news ultimately boosted shares of domestic steel and aluminum producers. Cleveland-Cliffs Inc (CLF) surged 18.72%, while other steelmakers like Nucor (NUE) and Steel Dynamics (STLD) saw gains of over 5%.
However, the broader implications of these tariffs on global trade remain a concern for investors. China has already imposed retaliatory tariffs on about $14 billion worth of U.S. goods, raising fears of an escalating trade war between the world’s two largest economies.
Sector Performance and Notable Movers
The energy sector led gains, with the S&P 500 energy index (.SPNY) rising 1.7%, tracking elevated oil prices. U.S. crude oil prices increased 1.49% to $72.06 a barrel, while Brent crude rose 1.29% to $75.64 per barrel.
In the technology sector, Nvidia (NVDA) shares climbed 3.41% to $134.27, contributing significantly to the Nasdaq’s strong performance. Other tech giants like Microsoft (MSFT) and Alphabet (GOOGL) also saw gains of over 1%.
McDonald’s (MCD) stock jumped 4.51% to $307.56 after the fast-food giant reported better-than-expected global comparable sales growth in its fourth-quarter results, despite a decline in U.S. comparable sales.
Upcoming Market Events and Economic Data
Investors are now turning their attention to several key events this week that could impact market direction:
1. Federal Reserve Chair Jerome Powell’s Testimony: Powell is scheduled to deliver his semiannual monetary policy testimony before the Senate Banking, Housing, and Urban Affairs Committee on Tuesday. His comments on tariffs and inflation will be closely monitored.
2. Consumer Price Index (CPI) Data: The January CPI report, due on Wednesday, will provide crucial insights into inflation trends, potentially influencing the Fed’s rate decision timeline.
3. Retail Sales Data: Friday’s release of retail sales figures will offer a glimpse into consumer spending patterns, a key driver of economic growth.
Fed Watch and Interest Rate Expectations
Market participants are closely watching for signals on the Federal Reserve’s monetary policy direction. Currently, expectations for a rate cut of at least 25 basis points do not exceed 50% until June, according to CME’s FedWatch Tool. Some analysts, including Morgan Stanley’s chief U.S. economist Michael Gapen, now anticipate only a single rate cut this year, likely at the June meeting.
Corporate News and Earnings
In other corporate news, BP Plc (BP) shares surged 6% following reports that activist investor Elliott Investment Management has built a significant stake in the company. The hedge fund is expected to push for strategic changes to improve BP’s performance.
As earnings season continues, investors will be watching for results from companies like Coca-Cola (KO), DoorDash (DASH), CVS Health (CVS), and Cisco (CSCO) later this week.
Looking Ahead
As markets navigate through tariff concerns, upcoming economic data, and the Federal Reserve’s policy stance, volatility may persist. Investors will be keenly watching how these factors interact to shape market trends in the coming days and weeks.
