NEW YORK — On Tuesday, U.S. stock markets experienced an upswing, driven by reports from various companies revealing that their profits exceeded analysts’ forecasts for the final quarter of the prior year, along with a decrease in Treasury yields.
The S&P 500 index rose by 0.9%, while other global markets exhibited only modest movements following Donald Trump’s return to the White House on Monday. The Dow Jones Industrial Average saw a significant increase, climbing 538 points or 1.2%, whereas the Nasdaq composite made a more measured gain of 0.6%.
Trump has announced plans for significant changes to international trade and economic policies, frequently targeting other nations. In contrast, most stock indexes in Asia and Europe recorded only slight adjustments. The bond market showed a decline in U.S. Treasury yields, retreating from the notable increases that had pressured stock markets around the globe recently. Additionally, bitcoin saw a dip from its record-high value achieved just a day earlier.
In the foreign currency sphere, both the Mexican peso and Canadian dollar fell in value against the U.S. dollar after Trump indicated his intention to impose 25% tariffs on imports from Canada and Mexico starting February 1. Although Trump also suggested he might consider imposing even more severe tariffs on Chinese imports during his campaign, he expressed a desire to continue discussions with China’s leader following the announcement.
Concerns over the implementation of extensive tariffs, coupled with the risk of policies that could lead to an increase in U.S. government debt, have contributed to the recent rise in Treasury yields, negatively impacting stock prices. Corporations are now required to demonstrate stronger earnings growth to sustain their stock valuations amidst these pressures.
On Tuesday, financial firm Charles Schwab reported earnings that surpassed expectations for the end of the previous year, causing its stock to soar by 5.9%. The company attributed its performance to an influx of client assets, which increased by 19% year-over-year to total $10.10 trillion.
3M also reported solid profit and revenue results for the last quarter, slightly above analysts’ predictions, which led its shares to rise by 4.2%. The well-known producer of products like Scotch tape and Command strips provided forecasts for its financial outcomes in 2025 that aligned with analyst estimates.
Despite being early in the earnings reporting season, companies within the S&P 500 have significantly surpassed earnings expectations at double the rate compared to the same time last quarter, according to strategists from Bank of America.
Moderna’s shares climbed by 5.4% after the announcement of receiving $590 million from the U.S. government to support continued development of flu vaccines. Furthermore, Oracle’s stock surged by 7.2% in anticipation of an upcoming announcement from Trump regarding investments in artificial intelligence infrastructure, collaborating with major players like OpenAI and SoftBank.
These stock gains helped to offset a notable decline in Walgreens Boots Alliance, which faced a 9.2% drop following accusations from the U.S. Justice Department. The department alleged that Walgreens had filled millions of prescriptions without valid medical purposes, including prescriptions for dangerous opioid quantities. Their lawsuit claims that the pharmacy chain’s pharmacists filled controlled substance prescriptions that demonstrated clear indicators of potential illegality.
Walgreens, which operates over 8,000 locations across the country, released a statement asserting its support for its pharmacists and emphasized its refusal to accept governmental claims that could put them in untenable positions under nonsensical regulations.
In total, the S&P 500 index saw an increase of 52.58 points, closing at 6,049.24. The Dow Jones Industrial Average gained 537.98 points to reach 44,025.81, while the Nasdaq composite rose by 126.58 points, finishing at 19,756.78.
In the bond market, Treasury yields decreased as traders reacted to previous months’ significant gains due to ongoing inflation concerns. The yield on the 10-year Treasury note fell from 4.62% to 4.56% since Friday’s close. Like the U.S. stock markets, bond trading was inactive on Monday in observance of Martin Luther King Jr. Day.
Even though the 10-year Treasury yield has decreased following an encouraging update on inflation last week, it remains above levels seen in September, when it was below 3.65%. Morgan Stanley strategist Michael Wilson opined that the trends in long-term interest rates mostly drive the broader U.S. stock market. He anticipates that this relationship will persist, with stocks falling as yields increase and vice versa until the 10-year Treasury yield sustainably drops below 4.50%, among other conditions.
Globally, stock indexes saw slight increases across Europe, following varied performances in Asia. Hong Kong’s Hang Seng index enjoyed a boost of 0.9% after the troubled Chinese property developer Country Garden was granted an extension to negotiate with its creditors.
In the cryptocurrency market, which has been buoyed by expectations that Trump will foster a friendlier regulatory environment, bitcoin retracted from its recent high above $109,000, stabilizing around just over $106,000.
