Market Gains As Tariffs Impact Metal Stocks and Corporate Earnings
The S&P 500 Index ($SPX) (SPY) closed Monday up +0.67%, with the Dow Jones Industrials Index ($DOWI) (DIA) increasing by +0.38%, and the Nasdaq 100 Index ($IUXX) (QQQ) rising +1.24%. March E-mini S&P futures (ESH25) gained +0.59%, while March E-mini Nasdaq futures (NQH25) climbed +1.12%.
Metal Makers Drive Market Upward with Tariff News
On Monday, stock indexes settled higher, primarily led by US metals and mining companies after President Trump announced a 25% tariff on US steel and aluminum imports. This news not only influenced stock prices positively but also led to an increase in gold prices to a record high and pushed copper prices to a four-month high. Additionally, strength in chip stocks contributed to the overall market gains.
M&A Activity Boosts Market Sentiment
Mergers and acquisitions (M&A) also played a role in bolstering stocks, as Hyatt Hotels agreed to purchase Playa Hotels & Resorts NV for $13.50 per share, totaling approximately $2.6 billion.
Mixed Earnings Reports Reflect Market Realities
The corporate earnings announcements on Monday showed mixed results. Rockwell Automation closed up more than +12% after beating expectations for its Q1 adjusted earnings per share (EPS) report. McDonald’s also performed well, rising over +4% after reporting a surprising increase in Q4 comparable sales. Conversely, ON Semiconductor fell by more than -8% when it forecasted Q4 revenue below consensus estimates, while Incyte Corp dropped more than -7% due to a disappointing EPS.
Key Economic Data on the Horizon
This week, the markets will be watching for several key economic updates. Fed Chair Powell will deliver a semiannual monetary policy testimony to the Senate Banking Committee on Tuesday. On Wednesday, the US January Consumer Price Index (CPI) is set to be released, with expectations of a steady year-over-year rate of 2.9%, while the core CPI is expected to ease slightly to 3.1%. Additionally, Fed Chair Powell will present before the House Financial Services panel on Wednesday. Market analysts anticipate a -0.1% decline in January retail sales and a +0.1% increase in January manufacturing production on Friday.
Promising Earnings Season Unfolds
As earnings season progresses, analysts predict that S&P 500 earnings grew by +7.5% year-over-year in Q4, marking the second-highest forecast in the past three years.
Interest Rate Outlook Remains Uncertain
Currently, the markets are pricing in a 7% chance of a -25 basis point rate cut during the upcoming Federal Open Market Committee (FOMC) meeting on March 18-19.
Global Markets Reflect Positive Trends
Internationally, stock markets showed upward trends. The Euro Stoxx 50 closed up +0.62%, while China’s Shanghai Composite Index touched a five-week high with a +0.56% rise. Japan’s Nikkei Stock 225 crept up +0.04%.
Interest Rate Developments
On Monday, March 10-year T-notes (ZNH25) dropped by -0.5 of a tick as the yield rose +0.2 basis points to 4.497%. Concerns over rising tariffs raised fears of inflation, which may hinder the Fed’s ability to cut interest rates. US importers will bear the cost of these tariffs, which could eventually be passed on to consumers. Meanwhile, the Treasury plans to issue $125 billion in T-notes and T-bonds this week, starting with a $58 billion auction of three-year T-notes.
European Bond Yields Decline
T-note prices saw some support due to a rally in European government bonds, where the 10-year German bund yield decreased by -1.0 basis points to 2.362%, and the 10-year UK gilt yield fell by -1.9 basis points to 4.457%. The Eurozone February Sentix investor confidence index rose +5.0 to a seven-month high of -12.7, surpassing expectations of -16.5. However, ECB Vice President Guindos cautioned that the US tariffs could trigger a “supply shock” impacting global economic growth, while swaps predict a 100% likelihood of a -25 basis point cut at the ECB’s March 6 meeting.
Market Leaders and Laggards
Stocks in the aluminum and steel sectors surged, as Cleveland-Cliffs (CLF) and Century Aluminum (CENX) both gained over +10%. Other notable risers included Nucor Corp (NUE) and Steel Dynamics (STLD) at more than +5%, while Alcoa (AA), Commercial Metals (CMC), and US Steel (X) increased by over +2%. In the technology sector, Broadcom (AVGO) rose over +4%, and other chip stocks also showed strong gains, contributing to market strength. Axsome Therapeutics (AXSM) saw a remarkable rise of more than +20% following its settlement with Teva Pharmaceuticals.
In contrast, ON Semiconductor (ON) dropped over -8% after forecasting lower Q4 revenue than expected, leading declines in both the S&P 500 and Nasdaq 100. Incyte Corp (INCY) fell more than -7% after disappointing EPS results, and Semtech (SMTC) saw a significant decline of over -30% due to lower expected sales for its CopperEdge products. Bio-Techne (TECH) and Illumina (ILMN) also faced losses, the latter after a downgrade from Barclays.
American Express (AXP) and Charles Schwab (SCHW) were among the Dow’s biggest laggards, both falling more than -2%. Kraft Heinz (KHC) closed down by more than -1% after a downgrade from Mizuho Securities.
Upcoming Earnings Reports
Future earnings reports to watch include those from American International Group Inc (AIG), Assurant Inc (AIZ), Carrier Global Corp (CARR), Coca-Cola Co/The (KO), DuPont de Nemours Inc (DD), Ecolab Inc (ECL), Edwards Lifesciences Corp (EW), Eversource Energy (ES), Fidelity National Information (FIS), Gilead Sciences Inc (GILD), Humana Inc (HUM), Leidos Holdings Inc (LDOS), Marriott International Inc/MD (MAR), Masco Corp (MAS), S&P Global Inc (SPGI), and Welltower Inc (WELL).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
