Wall Street Prepares for Volatility as Trump’s Second Term Begins
As markets reopened after the Martin Luther King Jr. holiday, Wall Street braced for potential volatility following the inauguration of President Donald Trump. Investors were focused on the new administration’s policies, particularly regarding energy, trade, and fiscal stimulus. Despite fears of aggressive tariff hikes, markets found some relief as Trump refrained from imposing universal import tariffs on his first day in office.
Market Reactions
US stock futures rose Tuesday morning, signaling optimism as traders digested the implications of Trump’s policy agenda. Chinese stocks listed on US exchanges surged as the absence of immediate tariffs on China alleviated some investor concerns. Alibaba (NYSE: BABA), JD.com (NASDAQ: JD), Pinduoduo (NASDAQ: PDD), and Baidu (NASDAQ: BIDU) all gained in premarket trading.
The dollar (DX-Y.NYB) retreated from a near two-year high, adding to the sense of relief among global markets. However, uncertainty remains as investors await further policy announcements.
Mixed Sector Performances
- Tech: Apple (NASDAQ: AAPL) saw its shares decline after Jefferies downgraded the stock to “underperform,” citing a reported 18.2% drop in iPhone sales in China during Q4 2024.
- Industrials: 3M Co. (NYSE: MMM) exceeded expectations with its Q4 results, leading to gains in premarket trading.
- Autos: General Motors (NYSE: GM) shares climbed after Deutsche Bank upgraded the stock, projecting strong Q4 results.
- Retail: Urban Outfitters (NASDAQ: URBN) gained momentum following Morgan Stanley’s upgrade to “overweight,” signaling room for growth despite recent rallies.
Sector Challenges
- Pharma: Walgreens (NASDAQ: WBA) slumped as the Department of Justice filed a lawsuit accusing the pharmacy chain of dispensing opioids irresponsibly.
- Crypto: The SEC, now under interim Republican leadership, signaled a potential shift in crypto regulation. Acting Chair Mark Uyeda and Trump’s SEC nominee Paul Atkins are expected to roll back the stricter policies introduced during the Biden administration.
Crypto and Conflict of Interest Concerns
Trump’s launch of the $TRUMP token and Melania Trump’s $MELANIA token ahead of the inauguration raised eyebrows. Reports indicate that 80% of $TRUMP tokens are held by CIC Digital and Fight, Fight, Fight, two entities affiliated with Trump’s businesses. While these tokens are marketed as expressions of support, ethics experts warn of potential conflicts of interest.
OP Community Update
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