US stock markets rallied and bond yields dipped on Tuesday, January 24, 2025, as investors reacted to President Donald Trump’s initial policy announcements. The markets had braced for aggressive trade actions, but Trump’s more measured approach provided a sense of relief, fueling optimism in the early days of his presidency.
Trump’s campaign rhetoric focused heavily on imposing significant tariffs on imports, particularly from China, Mexico, and Canada. While he had suggested a 25% tariff on goods from Mexico and Canada, his executive order on trade policy stopped short of implementing new duties. Instead, the order directed a comprehensive review of alleged unfair trade and currency practices by other countries.
This move was interpreted by many market analysts as a less aggressive stance than anticipated. Goldman Sachs noted that Trump’s initial comments on China were “notably less hawkish” than prior statements, suggesting that a “universal tariff” was a lower priority than previously assumed.
The perceived softening on trade policy led to a decline in bond yields. The 10-year Treasury yield fell two basis points to 4.584% on Tuesday morning. The US dollar also weakened, with the dollar index dropping approximately 0.9% to $108.39.
Beyond trade, Trump’s emphasis on pro-business and deregulation policies further buoyed market sentiment. His first-day actions included declaring a national energy emergency to boost US fossil fuel production and implementing a regulatory freeze. These moves signaled a continuation of the “Trump trade” narrative, reinforcing investor confidence in potential economic growth. At the market open, the S&P 500 rose 0.51%, the Dow Jones Industrial Average climbed 0.59%, and the Nasdaq composite saw a modest increase of 0.05%.
Dow Jones Industrial Average chart
In other news, concerns arose about the impact of a Trump-themed meme coin on the credibility of the cryptocurrency market. Additionally, reports surfaced that early investors in the meme coin were experiencing substantial returns. Other market developments included a potentially bullish signal in the stock market, rising credit card debt among Americans, and speculation about Trump’s strategy for resolving the war in Ukraine through increased sanctions on Russian oil.
