Stock market today: Wall Street takes Trump's latest tariff threats in stride, and indexes rise

NEW YORK (AP) — U.S. stocks rose Monday as Wall Street took President Donald Trump’s latest threat on tariffs in stride.

The S&P 500 climbed 0.7%, coming off a losing week that was bookended by worries about how potential tariffs could push up inflation and threaten the economy. The Dow Jones Industrial Average added 167 points, or 0.4%, and the Nasdaq composite rallied 1% as Nvidia and other Big Tech stocks led the way.

The bond market also remained relatively firm, with Treasury yields making only modest moves after Trump said over the weekend that he would announce 25% tariffs on all steel and aluminum imports, as well as other import duties later in the week.

Fear around tariffs has been at the center of Wall Street’s moves recently, and experts say the market likely has more swings ahead. The price of gold, which often rises when investors are feeling nervous, climbed again Monday to top $2,930 per ounce and set another record. But Trump has shown he can be just as quick to pull back on threats, like he did with 25% tariffs he had announced on Canada and Mexico, suggesting they may be merely a negotiating chip rather than a true long-term policy.

Trump, of course, has already gone ahead with 10% tariffs on China. Those will likely affect Wall Street by cleaving winning industries from losing ones, but they won’t necessarily drag the entire market lower, according to Michael Wilson and other strategists at Morgan Stanley. A big, market-wide impact would be more likely “if we were to see sustained tariffs on a range of countries including 25% tariffs on Mexico and Canada.”

Stocks of U.S. steel and aluminum producers jumped Monday, banking on expectations tariffs could help their profits, while the overall S&P 500 index remained relatively calm.

Nucor rose 5.6%, Cleveland-Cliffs jumped 17.9% and Alcoa climbed 2.2%.

Some companies that have to buy steel in their manufacturing swung, but not so sharply. General Motors fell 1.7%, Caterpillar slipped 0.2% and Ford Motor was flat.

In the meantime, earnings reports from big U.S. companies also helped drive trading.

McDonald’s climbed 4.8% even though it reported profit and revenue for the end of 2024 that were just shy of analysts’ expectations. Investors focused instead on better-than-expected strength for restaurants outside the United States, particularly in the Middle East, Japan and other markets with licensed McDonald’s locations.

Big Tech stocks were some of the strongest forces pushing the S&P 500 higher, including gains of 2.9% for Nvidia and 4.5% for Broadcom. They had come under pressure last month after a Chinese upstart upended Wall Street’s artificial-intelligence boom by saying it had developed a large language model that could perform like the world’s best without having to use the most expensive, top-flight chips.

Despite the development by DeepSeek, big U.S. companies have since said they’re still planning to plow billions of dollars into their AI endeavors. That’s calmed worries that DeepSeek could have turned off a huge spigot of spending for the industry, at least for now.

Such gains helped offset a 7.9% drop for Incyte after the biopharmaceutical company reported weaker profit for the latest quarter than analysts expected.

All told, the S&P 500 rose 40.45 points to 6,066.44. The Dow Jones Industrial Average added 167.01 to 44,4701.41, and the Nasdaq composite jumped 190.87 to 19,714.27.

In the bond market, the yield on the 10-year Treasury held steady at 4.50%, where it was late Friday. The yield on the two-year Treasury, which more closely tracks expectations for what the Federal Reserve will do with short-term interest rates, fell to 4.27% from 4.29%.

The Fed cut its main interest rate several times through the end of last year, but traders have been sharply curtailing their expectations for more reductions in 2025, in part because of fears about potentially higher inflation from tariffs. While lower rates can give a boost to the economy and investment prices, they can also give inflation more fuel.

Fed Chair Jerome Powell will be offering testimony before Congress later this week, where he could offer more hints about what the Fed is thinking. In December, Fed officials sent financial markets sharply lower after indicating they may cut rates only twice this year. Now, some traders and economists think the Fed may not cut at all.

Reports are also coming this week on inflation, which could further drive the Fed’s actions. On Wednesday, economists expect a report to show prices for eggs, gasoline and other living costs for U.S. consumers were overall 2.9% higher in January than a year earlier.

In stock markets abroad, indexes rose across much of Europe and Asia.

Tokyo’s Nikkei 225 was virtually unchanged after Japan’s government reported a record current account surplus last year.

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AP Business Writer Yuri Kageyama contributed.