US Stocks Rise; Trump’s Tariff Threat; Inflation Data in Focus

Futures for the main US stock market indexes rose on Monday as investors processed former President Donald Trump’s recent statements on tariffs while awaiting key economic data set to be released this week.

Dow Jones futures were up 120 points (+0.3%), S&P 500 futures were up 25 points (+0.4%) and Nasdaq 100 futures were up 135 points (+0.6%).

On Friday, the indexes closed in the red after Trump’s announcement of new tariffs on several countries, coupled with weak employment and consumer confidence data.

Trump to Apply 25% Tariffs on Steel and Aluminum

Trump announced on Sunday that on Monday, he would impose a 25% tariff on all steel and aluminum imports to the US, just days after his 10% tariffs on China took effect.

This measure builds upon previous tariffs on metals, which were imposed during his first term and later maintained, albeit with less enforcement, by the Biden administration.

The imports most affected will be those from Canada, Brazil, and Mexico, the primary steel exporters to the US. However, investors are hopeful that Trump will provide relief to Mexico and Canada, as he postponed the imposition of 25% tariffs on both countries last week due to their critical role in the US supply chain.

During his previous presidency, Trump granted tariff exemptions to several allies.

Expectations for the US Inflation Report

On the economic front, the key focus of the week will be the January Consumer Price Index (CPI), set to be released on Wednesday.

The report is expected to indicate a monthly slowdown in inflation, while the annual rate is projected to remain in line with December’s figure.

Persistent inflation reduces the likelihood that the Federal Reserve will cut interest rates in the short term, a stance the central bank reiterated in January when it kept its monetary policy unchanged.

Analysts and Fed officials have warned that Trump’s tariffs, which will impact US importers, could add further inflationary pressure in the coming months.

Meanwhile, Federal Reserve Chairman Jerome Powell will appear before Congress this week. On Tuesday, he will testify before the Senate Banking Committee, followed by an appearance before the House Financial Services Committee on Wednesday. It will be his first legislative testimony since July.

McDonald’s and Other Major Companies Report Earnings

On Monday, McDonald’s (MCD) will report its financial results, while earnings from Vertex Pharmaceuticals (VRTX), Coca-Cola (KO), and S&P Global (SPGI) are expected later in the week.

In the energy sector, BP (BP) will be in the spotlight after Reuters reported that Elliott Investment Management had acquired a stake in the company.

Bloomberg indicated that the activist fund is seeking to push for strategic changes at BP to boost shareholder value, arguing that the oil company is undervalued compared to its competitor Shell.

Oil Rebounds After Weeks of Losses

Crude oil prices recovered on Monday after three consecutive weeks of losses, despite Trump’s announcement of new tariffs on steel and aluminum.

At 05:30 ET, WTI crude futures were up 1.2% to $71.85 a barrel, while Brent crude climbed 1.2% to $75.54.

Both contracts fell by about 2% last week, pressured by a sharp increase in US crude oil inventories and concerns over escalating global trade tensions.

Uncertainty surrounding trade policies and potential tightening of oil supply are driving the recent recovery in crude oil prices.